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Under- versus overconfidence: an experiment on how others perceive a biased self-assessment

Author

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  • Carmen Thoma

Abstract

This paper reports findings of a laboratory experiment, which explores how reported self-assessment regarding the own relative performance is perceived by others. In particular, I investigate whether overconfident or underconfident subjects are considered as more likeable, and who of the two is expected to win in a tournament, thereby controlling for performance. Underconfidence beats overconfidence in both respects. Underconfident subjects are rewarded significantly more often than overconfident subjects, and are significantly more often expected to win. Subjects being less convinced of their performance are taken as more congenial and are expected to be more ambitious to improve, whereas overconfident subjects are rather expected to rest on their high beliefs. While subjects do not anticipate the stronger performance signal of underconfidence, they anticipate its higher sympathy value. The comparison to a non-strategic setting shows that men strategically deflate their self-assessment to be rewarded by others. Women, in contrast, either do not deflate their self-assessment or do so even in non-strategic situations, a behavior that might be driven by non-monetary image concerns of women. Copyright Economic Science Association 2016

Suggested Citation

  • Carmen Thoma, 2016. "Under- versus overconfidence: an experiment on how others perceive a biased self-assessment," Experimental Economics, Springer;Economic Science Association, vol. 19(1), pages 218-239, March.
    • Handle: RePEc:kap:expeco:v:19:y:2016:i:1:p:218-239
    DOI: 10.1007/s10683-015-9435-2
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    Citations

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    Cited by:

    1. Marie-Pierre Dargnies & Rustamdjan Hakimov & Dorothea Kübler, 2019. "Self-Confidence and Unraveling in Matching Markets," Management Science, INFORMS, vol. 65(12), pages 5603-5618, December.
    2. Haeckl, Simone, 2022. "Image concerns in ex-ante self-assessments–Gender differences and behavioral consequences," Labour Economics, Elsevier, vol. 76(C).
    3. Grund, Christian & Soboll, Alexandra, 2023. "Monetary Rewards, Hierarchy Level and Working Hours as Drivers of Employees' Self-Evaluations," IZA Discussion Papers 16042, Institute of Labor Economics (IZA).
    4. Markus Spiwoks & Kilian Bizer, 2018. "On the Measurement of Overconfidence: An Experimental Study," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(1), pages 30-37, 01-2018.

    More about this item

    Keywords

    Self-assessment; Overconfidence; Signaling; Experiment; C91; D03; J16;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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