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Absolute vs. relative success: why overconfidence is an inefficient equilibrium

Overconfidence is one of the most ubiquitous biases in the social sciences, but the evidence regarding its overall costs and benefits is mixed. To test the possibility that overconfidence might yield important relative benefits that offset its absolute costs, we conducted an experiment (N=298 univer...

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Bibliographische Detailangaben
Hauptverfasser: Soldà, Alice (VerfasserIn) , Ke, Changxia (VerfasserIn) , Hippel, William von (VerfasserIn) , Page, Lionel (VerfasserIn)
Dokumenttyp: Buch/Monographie Arbeitspapier
Sprache:Englisch
Veröffentlicht: Heidelberg Heidelberg University, Department of Economics March 2021
Schriftenreihe:AWI discussion paper series no. 700 (March 2021)
In: AWI discussion paper series (no. 700 (March 2021))

DOI:10.11588/heidok.00029513
Schlagworte:
Graue Literatur
Online-Zugang:Verlag, kostenfrei: https://www.uni-heidelberg.de/md/awi/forschung/dp700.pdf
Resolving-System, kostenfrei: https://doi.org/10.11588/heidok.00029513
Resolving-System, kostenfrei: http://hdl.handle.net/10419/235023
Resolving-System: https://nbn-resolving.org/urn:nbn:de:bsz:16-heidok-295132
Langzeitarchivierung Nationalbibliothek: https://d-nb.info/123056232X/34
Verlag, kostenfrei: http://www.ub.uni-heidelberg.de/archiv/29513
Volltext
Verfasserangaben:Alice Soldà, Changxia Ke, William von Hippel, Lionel Page
Beschreibung
Zusammenfassung:Overconfidence is one of the most ubiquitous biases in the social sciences, but the evidence regarding its overall costs and benefits is mixed. To test the possibility that overconfidence might yield important relative benefits that offset its absolute costs, we conducted an experiment (N=298 university students) in which pairs of participants bargain over the unequal allocation of a prize that was earned via a joint effort. We manipulated confidence using a binary noisy signal to investigate the causal effect of negotiators' beliefs about their relative contribution on the outcome of the negotiation. Our results provide evidence that high levels of confidence lead to relative benefits (how much one earns compared to one's partner) but absolute costs (how much money one receives overall). These results suggest that overconfidence creates an inefficient equilibrium whereby overconfident negotiators benefit over their partners even as they bring about joint losses.
Beschreibung:Online Resource
DOI:10.11588/heidok.00029513

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