How do judgmental overconfidence and overoptimism shape innovative activity?
AbstractRecent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism is positively associated with innovation, judgmental overconfidence is negatively linked to innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.
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Bibliographic InfoPaper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 106.
Date of creation: Jan 2013
Date of revision: Nov 2013
Innovation; entrepreneurship; overconfi dence; experiment;
Other versions of this item:
- Holger Herz & Daniel Schunk & Christian Zehnder, 2013. "How Do Judgmental Overconfidence and Overoptimism Shape Innovative Activity?," CESifo Working Paper Series 4084, CESifo Group Munich.
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-26 (All new papers)
- NEP-CBE-2013-01-26 (Cognitive & Behavioural Economics)
- NEP-ENT-2013-01-26 (Entrepreneurship)
- NEP-EXP-2013-01-26 (Experimental Economics)
- NEP-INO-2013-01-26 (Innovation)
- NEP-KNM-2013-01-26 (Knowledge Management & Knowledge Economy)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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