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Apparent Overconfidence

  • Jean‐Pierre Benoît
  • Juan Dubra

It is common for a majority of people to rank themselves as better than average on simple tasks and worse than average on dificult tasks. The literature takes for granted that this apparent miscon?dence is problematic. We argue, however, that this behaviour is consistent with purely rational Bayesian updaters. In fact, better-than-average data by itself cannot be used to show overcon?dence; we indicate which type of data can be used. Our theory is consistent with empirical patterns found in the literature.

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File URL: http://hdl.handle.net/10.3982/ECTA8583
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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 79 (2011)
Issue (Month): 5 (09)
Pages: 1591-1625

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Handle: RePEc:ecm:emetrp:v:79:y:2011:i:5:p:1591-1625
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  1. Jeremy Clark & Lana Friesen, 2009. "Overconfidence in Forecasts of Own Performance: An Experimental Study," Economic Journal, Royal Economic Society, vol. 119(534), pages 229-251, 01.
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