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Overconfidence Can Improve an Agent's Relative and Absolute Performance in Contests

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  • Ludwig, Sandra
  • Wichardt, Philipp C.
  • Wickhorst, Hanke

Abstract

This paper suggests a potential rationale for the recent empirical finding that overconfident agents tend to self-select into more competitive environments (e.g. Dohmen and Falk, forthcoming). In particular, it shows that moderate overconfidence in a contest can improve the agent's performance relative to an unbiased opponent and can even lead to an advantage for the overconfident agent in absolute terms.

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File URL: http://epub.ub.uni-muenchen.de/11885/1/contestsletter_ELR1a.pdf
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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 11885.

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Date of creation: 05 Jul 2010
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Handle: RePEc:lmu:muenec:11885

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Keywords: Overconfidence; Contests;

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  1. Luís Santos-Pinto, 2010. "Positive Self-Image In Tournaments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 475-496, 05.
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Cited by:
  1. Vanessa Mertins & Wolfgang Hoffeld, 2013. "Do Overconfident Workers Cooperate Less? The Relationship between Overconfidence and Cooperation in Team Production," IAAEU Discussion Papers 201313, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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