How do judgmental overconfidence and overoptimism shape innovative activity?

Holger Herz, Daniel Schunk and Christian Zehnder

No 106, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism is positively associated with innovation, judgmental overconfidence is negatively linked to innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.

Keywords: Innovation; entrepreneurship; overconfi dence; experiment (search for similar items in EconPapers)
JEL-codes: C92 D23 D83 (search for similar items in EconPapers)
Date: 2013-01, Revised 2013-11
New Economics Papers: this item is included in nep-cbe, nep-ent, nep-exp, nep-ino and nep-knm
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https://www.zora.uzh.ch/id/eprint/70289/5/econwp106.pdf (application/pdf)

Related works:
Journal Article: How do judgmental overconfidence and overoptimism shape innovative activity? (2014)
Working Paper: How Do Judgmental Overconfidence and Overoptimism Shape Innovative Activity? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:106

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