IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v94y2004i5p1536-1557.html
   My bibliography  Save this article

Confidence-Enhanced Performance

Author

Listed:
  • Olivier Compte
  • Andrew Postlewaite

Abstract

There is ample evidence that emotions affect performance. Positive emotions can improve performance, while negative ones can diminish it. For example, the fears induced by the possibility of failure or of negative evaluations have physiological consequences (shaking, loss of concentration) that may impair performance in sports, on stage, or at school. There is also ample evidence that individuals have distorted recollection of past events and distorted attributions of the causes of success or failure. Recollection of good events or successes is typically easier than recollection of bad ones or failures. Successes tend to be attributed to intrinsic aptitudes or effort, while failures are attributed to bad luck. In addition, these attributions are often reversed when judging the performance of others. The objective of this paper is to incorporate the phenomenon that emotions affect performance into an otherwise standard decision theoretic model and show that in a world where performance depends on emotions, biases in information processing enhance welfare.

Suggested Citation

  • Olivier Compte & Andrew Postlewaite, 2004. "Confidence-Enhanced Performance," American Economic Review, American Economic Association, vol. 94(5), pages 1536-1557, December.
  • Handle: RePEc:aea:aecrev:v:94:y:2004:i:5:p:1536-1557
    Note: DOI: 10.1257/0002828043052204
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0002828043052204
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Waldman, Michael, 1994. "Systematic Errors and the Theory of Natural Selection," American Economic Review, American Economic Association, vol. 84(3), pages 482-497, June.
    2. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    3. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, January.
    4. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 37-82.
    5. Van den Steen, Eric, 2002. "Skill or Luck? Biases of Rational Agents," Working papers 4255-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. Roland Bénabou & Jean Tirole, 2005. "Self-Confidence and Personal Motivation," International Economic Association Series, in: Bina Agarwal & Alessandro Vercelli (ed.), Psychology, Rationality and Economic Behaviour, chapter 2, pages 19-57, Palgrave Macmillan.
    7. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Niklas Karlsson & George Loewenstein & Duane Seppi, 2009. "The ostrich effect: Selective attention to information," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 95-115, April.
    2. Kai Barron, 2021. "Belief updating: does the ‘good-news, bad-news’ asymmetry extend to purely financial domains?," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 31-58, March.
    3. Adriani, Fabrizio & Sonderegger, Silvia, 2015. "Trust, trustworthiness and the consensus effect: An evolutionary approach," European Economic Review, Elsevier, vol. 77(C), pages 102-116.
    4. Drew Fudenberg, 2006. "Advancing Beyond Advances in Behavioral Economics," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 694-711, September.
    5. Belianin, A., 2017. "Face to Face to Human Being: Achievements and Challenges of Behavioral Economics," Journal of the New Economic Association, New Economic Association, vol. 34(2), pages 166-175.
    6. Herold, Florian & Netzer, Nick, 2023. "Second-best probability weighting," Games and Economic Behavior, Elsevier, vol. 138(C), pages 112-125.
    7. Ederer, Florian & Stremitzer, Alexander, 2017. "Promises and expectations," Games and Economic Behavior, Elsevier, vol. 106(C), pages 161-178.
    8. Bobba, Matteo & Frisancho, Veronica, 2022. "Self-perceptions about academic achievement: Evidence from Mexico City," Journal of Econometrics, Elsevier, vol. 231(1), pages 58-73.
    9. Battigalli, Pierpaolo & Dufwenberg, Martin, 2009. "Dynamic psychological games," Journal of Economic Theory, Elsevier, vol. 144(1), pages 1-35, January.
    10. Dufwenberg, Martin & Patel, Amrish, 2019. "Introduction to special issue on psychological game theory," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 181-184.
    11. David Danz & Dorothea Kübler & Lydia Mechtenberg & Julia Schmid, 2015. "On the Failure of Hindsight-Biased Principals to Delegate Optimally," Management Science, INFORMS, vol. 61(8), pages 1938-1958, August.
    12. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 67-87.
    13. Klaus Wälde, 2016. "Emotion Research in Economics," Working Papers 1611, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    14. Ghosal, Sayantan & Dalton, Patricio, 2013. "Characterizing Behavioral Decisions with Choice Data," CAGE Online Working Paper Series 107, Competitive Advantage in the Global Economy (CAGE).
    15. Yuval Heller & Eyal Winter, 2020. "Biased-Belief Equilibrium," American Economic Journal: Microeconomics, American Economic Association, vol. 12(2), pages 1-40, May.
    16. Yan Chen & F. Maxwell Harper & Joseph Konstan & Sherry Xin Li, 2010. "Social Comparisons and Contributions to Online Communities: A Field Experiment on MovieLens," American Economic Review, American Economic Association, vol. 100(4), pages 1358-1398, September.
    17. Ernst Fehr & Klaus M. Schmidt, "undated". "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
    18. Jiabin Wu, 2018. "Indirect higher order beliefs and cooperation," Experimental Economics, Springer;Economic Science Association, vol. 21(4), pages 858-876, December.
    19. Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, 2008. "Fairness and the Optimal Allocation of Ownership Rights," Economic Journal, Royal Economic Society, vol. 118(531), pages 1262-1284, August.
    20. Yoshifumi Hino & Yusuke Zennyo, 2017. "Corporate social responsibility and strategic relationships," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(3), pages 231-244, September.

    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:94:y:2004:i:5:p:1536-1557. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.