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Confidence and career choices: An experiment

Kai Barron () and Christina Gravert

No SP II 2018-301r2, Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center

Abstract: Confidence in one's own abilities is often seen as an important determinant of being successful. Empirical evidence about how such beliefs about one's own abilities causally influence choices is, however, sparse. In this paper, we use a stylized laboratory experiment to investigate the causal effect of an increase in confidence on two important choices made by workers in the labor market: (i) choosing between jobs with a payment scheme that depends heavily on ability [high earnings risk] and those that pay a fixed wage [low earnings risk], and (ii) the subsequent choice of how much effort to exert within the job. We find that an exogenous increase in confidence leads to an increase in subjects' propensity to choose payment schemes that depend heavily on ability. This is detrimental for low ability workers due to high baseline levels of confidence.

Keywords: overconfidence; experiment; beliefs; real-effort; career choices (search for similar items in EconPapers)
JEL-codes: C91 D03 M50 J24 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-lma
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https://www.econstor.eu/bitstream/10419/221821/1/ii18-301r2.pdf (application/pdf)

Related works:
Working Paper: Confidence and Career Choices: An Experiment (2019) Downloads
Working Paper: Confidence and career choices: An experiment (2019)
Working Paper: Confidence and Career Choices: An Experiment (2018) Downloads
Working Paper: Confidence and career choices: An experiment (2018)
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