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Overconfidence in Search

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Author Info

  • Dubra, J.

Abstract

In a standard search model I relax the assumption that agents know the distribution of offers and characterize the behavioral and welfare consequences of overconfidence. Optimistic individuals search longer if they are equally stubborn and high offers are good news. Otherwise, the pessimists search longer. The welfare of unbiased individuals is larger than that of overconfident decision makers if the latter's biases are large and searchers stubborn. Otherwise, the overconfident may be better off. Finally, I give a testable implication of overconfidence and discuss applications and policy issues.

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File URL: http://econ.as.nyu.edu/docs/IO/9186/RR99-10.PDF
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Bibliographic Info

Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 99-10.

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Length: 20 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:cvs:starer:99-10

Contact details of provider:
Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
Phone: (212) 998-8936
Fax: (212) 995-3932
Email:
Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
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Cited by:
  1. Benoit, Jean-Pierre & Dubra, Juan, 2006. "The Problem of Prevention," Working Papers 06-01, C.V. Starr Center for Applied Economics, New York University.
  2. Diego García & Francesco Sangiorgi & Branko Urošević, 2007. "Overconfidence and Market Efficiency with Heterogeneous Agents," Economic Theory, Springer, vol. 30(2), pages 313-336, February.

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