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Does overconfidence promote cooperation? Theory and experimental evidence

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  • Yin, Xile
  • Li, Jianbiao
  • Bao, Te

Abstract

This paper explores the potential “bright side” of overconfidence. We examine the effects of two types of overconfidence—overestimation and overprecision—on the contribution to the public good in a two-person threshold public good game. Experimental results show that the influence of overconfidence on contribution in public goods crucially depends on the agents’ type of preferences. Overestimation leads to a higher contribution by conditional cooperators, but a lower contribution by free-riders. Overprecision, in general, leads to a higher contribution by conditional cooperators, but has little effect on the contribution of free-riders.

Suggested Citation

  • Yin, Xile & Li, Jianbiao & Bao, Te, 2019. "Does overconfidence promote cooperation? Theory and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 79(C), pages 119-133.
    • Handle: RePEc:eee:soceco:v:79:y:2019:i:c:p:119-133
    DOI: 10.1016/j.socec.2019.02.008
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    More about this item

    Keywords

    Overconfidence; Overestimation; Overprecision; Heterogeneous preferences; Threshold public good game;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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