Apparent overconfidence
Resumen:
It is common for a majority of people to rank themselves as better than average on simple tasks and worse than average on difficult tasks. The literature takes for granted that this apparent misconfidence is problematic. We argue, however, that this behaviour is consistent with purely rational Bayesian updaters. In fact, better-than average data by itself cannot be used to show overconfidence; we indicate which type of data can be used. Our theory is consistent with empirical patterns found in the literature.
| 2011 | |
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Overconfidence Experimental Economics Irrationality Signalling Models |
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| Inglés | |
| Universidad de Montevideo | |
| REDUM | |
| https://hdl.handle.net/20.500.12806/1316 | |
| Acceso abierto | |
| Attribution-NonCommercial-NoDerivatives 4.0 Internacional |
| Sumario: | It is common for a majority of people to rank themselves as better than average on simple tasks and worse than average on difficult tasks. The literature takes for granted that this apparent misconfidence is problematic. We argue, however, that this behaviour is consistent with purely rational Bayesian updaters. In fact, better-than average data by itself cannot be used to show overconfidence; we indicate which type of data can be used. Our theory is consistent with empirical patterns found in the literature. |
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