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Do we measure overconfidence? A closer look at the interval production task

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  • Langnickel, Ferdinand
  • Zeisberger, Stefan

Abstract

The most common test for overconfidence in the form of miscalibration—the interval production task (IP)—is based on the assumption that people internalize requested confidence levels. We demonstrate experimentally that decision makers’ perceived confidence is, however, unaffected by variations in the requested confidence level. In addition, we find large heterogeneity in perceived confidence that the traditional IP measure fails to account for. We show that the alternative measure based on decision makers’ perceived confidence by contrast yields coherent, moderate overconfidence levels. Our evidence suggests that the consistency of the two measures is limited and that they are related to different individual characteristics.

Suggested Citation

  • Langnickel, Ferdinand & Zeisberger, Stefan, 2016. "Do we measure overconfidence? A closer look at the interval production task," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 121-133.
    • Handle: RePEc:eee:jeborg:v:128:y:2016:i:c:p:121-133
    DOI: 10.1016/j.jebo.2016.04.019
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    References listed on IDEAS

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    Cited by:

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    3. Karl Halvor Teigen & Erik Løhre & Sigrid Møyner Hohle, 2018. "The boundary effect: Perceived post hoc accuracy of prediction intervals," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 13(4), pages 309-321, July.
    4. Deaves, Richard & Kluger, Brian & Miele, Jennifer, 2018. "An exploratory experimental analysis of path-dependent investment behaviors," Journal of Economic Psychology, Elsevier, vol. 67(C), pages 47-65.
    5. Ying Han & David Budescu, 2019. "A universal method for evaluating the quality of aggregators," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(4), pages 395-411, July.
    6. Ferretti, Valentina & Montibeller, Gilberto & von Winterfeldt, Detlof, 2023. "Testing the effectiveness of debiasing techniques to reduce overprecision in the elicitation of subjective continuous probability distributions," LSE Research Online Documents on Economics 115333, London School of Economics and Political Science, LSE Library.
    7. Trejos, Cristian & van Deemen, Adrian & Rodríguez, Yeny E. & Gómez, Juan M., 2019. "Overconfidence and disposition effect in the stock market: A micro world based setting," Journal of Behavioral and Experimental Finance, Elsevier, vol. 21(C), pages 61-69.
    8. Ferretti, Valentina & Montibeller, Gilberto & von Winterfeldt, Detlof, 2023. "Testing the effectiveness of debiasing techniques to reduce overprecision in the elicitation of subjective continuous probability distributions," European Journal of Operational Research, Elsevier, vol. 304(2), pages 661-675.

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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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