Skill or Luck? Biases of Rational Agents

Eric Van den Steen

No 4255-02, Working papers from Massachusetts Institute of Technology (MIT), Sloan School of Management

Abstract: This paper shows why, in a world with differing priors, rational agents tend to attribute their own success more to skill and their failure more to bad luck than an outsider. It further shows why each agent in a group might think he or she is the best, why an agent might overestimate the control he has over the outcome, and why two agents' estimated contributions often add up to more than 100%. Underlying all these phenomena is a simple and robust mechanism that endogenously generates overoptimism about one's own actions. The paper also shows how these biases hinder learning and discusses some implications for organizations.

Keywords: Success; Failure; Attribution and Inference Bias; Rational Agents (search for similar items in EconPapers)
Date: 2002-08-09
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Citations: View citations in EconPapers (8)

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Working Paper: Skill or Luck? Biases of Rational Agents (2002)
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