An Unlucky Feeling: Persistent Overestimation of Absolute Performance with Noisy Feedback
AbstractHow does overconfidence arise and persist in the face of experience and feedback? We examine experimentally how individuals' beliefs about their absolute, as opposed to relative, performance on a quiz react to noisy, but unbiased, feedback. Participants believe themselves to have received `unlucky' feedback and they overestimate their own scores, but they exhibit no overconfidence in non-ego-relevant beliefs---in this case, about others' scores. Unlike previous studies of relative performance estimates, we find this to be driven by overconfident priors, as opposed to biased updating, which suggests that social comparisons contribute to biased information processing. While feedback improves performance estimates, this learning does not translate into improved estimates of subsequent performances. This suggests that people use performance feedback to update their beliefs about their ability differently than they do to update their beliefs about their performance, contributing to the persistence of overconfidence.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt0dh5s03j.
Date of creation: 11 Apr 2011
Date of revision:
Contact details of provider:
Postal: 2127 North Hall, Santa Barbara, CA 93106-9210
Phone: (805) 893-3670
Fax: (805) 893-8830
Web page: http://www.escholarship.org/repec/ucsbecon_dwp/
More information through EDIRC
overconfidence; feedback; overestimation; absolute performance; Bayesian updating; biased updating; information processing; learning transfer; cross-game learning; quadratic scoring rule; behavioral economics; experimental economics; Social and Behavioral Sciences;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
- NEP-CBE-2012-03-28 (Cognitive & Behavioural Economics)
- NEP-EVO-2012-03-28 (Evolutionary Economics)
- NEP-EXP-2012-03-28 (Experimental Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Camille Cornand & Franck Heinemann, 2013. "Measuring Agents’ Reaction to Private and Public Information in Games with Strategic Complementarities," Working Papers 1341, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Camille Cornand & Frank Heinemann, 2014.
"Measuring agents’ reaction to private and public information in games with strategic complementarities,"
Springer, vol. 17(1), pages 61-77, March.
- Camille Cornand & Frank Heinemann, 2014. "Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities," Working Papers halshs-00925018, HAL.
- Camille Cornand & Frank Heinemann, 2010. "Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities," CESifo Working Paper Series 2947, CESifo Group Munich.
- Noémi Berlin & Marie-Pierre Dargnies, 2012. "Linking Beliefs to Willingness to Compete," Documents de travail du Centre d'Economie de la Sorbonne 12075, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- repec:hal:journl:halshs-00755660 is not listed on IDEAS
- Noémi Berlin & Marie-Pierre Dargnies, 2012. "Linking Beliefs to Willingness to Compete," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00755660, HAL.
- Owens, David & Grossman , Zachary & Fackler , Ryan, 2012. "The Control Premium: A Preference for Payoff Autonomy," University of California at Santa Barbara, Economics Working Paper Series qt5bg845s1, Department of Economics, UC Santa Barbara.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff).
If references are entirely missing, you can add them using this form.