Overconfident: Do you put your money on it?

Erik Hoelzl, Aldo Rustichini

Research output: Contribution to journalArticle

81 Scopus citations

Abstract

A group exhibits overconfidence if significantly more than half the group members declare to be better than the median in some characteristic. Overconfidence was found in verbal reports for a variety of characteristics and settings but was less often studied for choice behaviour. In an experiment we tested how perceived relative skill influences verbal and choice behaviour. Treatments varied task difficulty and payment. Choice behaviour changes from overconfidence to underconfidence when the task changes from easy and familiar to non-familiar. This effect is significant when monetary payments are at stake and weak when they are not.

Original languageEnglish (US)
Pages (from-to)305-318
Number of pages14
JournalEconomic Journal
Volume115
Issue number503
DOIs
StatePublished - Apr 1 2005

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