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Self-confidence and strategic behavior

Author

Listed:
  • Gary Charness

    () (University of California at Santa Barbara)

  • Aldo Rustichini

    () (University of Minnesota)

  • Jeroen Ven

    () (University of Amsterdam and Tinbergen Institute)

Abstract

Abstract We suggest that overconfidence (conscious or unconscious) is motivated in part by strategic considerations, and test this experimentally. We find compelling supporting evidence in the behavior of participants who send and respond to others’ statements of confidence about how well they have scored on an IQ test. In two-player tournaments where the higher score wins, a player is very likely to choose to compete when he knows that his own stated confidence is higher than the other player’s, but rarely when the reverse is true. Consistent with this behavior, stated confidence is inflated by males when deterrence is strategically optimal and is instead deflated (by males and females) when luring (encouraging entry) is strategically optimal. This behavior is consistent with the equilibrium of the corresponding signaling game. Overconfident statements are used in environments that seem familiar, and we present evidence that suggests that this can occur on an unconscious level.

Suggested Citation

  • Gary Charness & Aldo Rustichini & Jeroen Ven, 2018. "Self-confidence and strategic behavior," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 72-98, March.
  • Handle: RePEc:kap:expeco:v:21:y:2018:i:1:d:10.1007_s10683-017-9526-3
    DOI: 10.1007/s10683-017-9526-3
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    Citations

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    Cited by:

    1. Proto, Eugenio & Rustichini, Aldo & Sofianos, Andis, 2014. "Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma," IZA Discussion Papers 8499, Institute of Labor Economics (IZA).
    2. Sidartha Gordon & Alessandro Riboni, 2015. "Doubts and Dogmatism in Conflict Behaviour," Economic Journal, Royal Economic Society, vol. 125(589), pages 1790-1817, December.
    3. Basteck, Christian & Mantovani, Marco, 2018. "Cognitive ability and games of school choice," Games and Economic Behavior, Elsevier, vol. 109(C), pages 156-183.
    4. Ludwig, Sandra & Fellner-Röhling, Gerlinde & Thoma, Carmen, 2017. "Do women have more shame than men? An experiment on self-assessment and the shame of overestimating oneself," European Economic Review, Elsevier, vol. 92(C), pages 31-46.
    5. repec:eee:gamebe:v:113:y:2019:i:c:p:651-672 is not listed on IDEAS
    6. Alice Solda & Changxia Ke & Lionel Page & William von Hippel, 2019. "Strategically delusional," QuBE Working Papers 057, QUT Business School.
    7. Ritwik Banerjee & Nabanita Datta Gupta & Marie Claire Villeval, 2018. "Self Confidence Spillovers and Motivated Beliefs," Economics Working Papers 2018-02, Department of Economics and Business Economics, Aarhus University.
    8. Peter Schwardmann & Joël van der Weele, 2016. "Deception and Self-Deception," Tinbergen Institute Discussion Papers 16-012/I, Tinbergen Institute.
    9. Alice Soldà & Changxia Ke & Lionel Page & William von Hippel, 2019. "Strategically delusional," Working Papers 1908, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    10. Ritwik Banerjee & Nabanita Datta Gupta & Marie Claire Villeval, 2019. "Self Confidence Spillovers, Status and Motivated Beliefs," Working Papers halshs-01760347, HAL.
    11. repec:kap:expeco:v:22:y:2019:i:1:d:10.1007_s10683-018-9584-1 is not listed on IDEAS
    12. Anya Samek, 2015. "Gender Differences in Job Entry Decisions: A University-Wide Field Experiment," Natural Field Experiments 00419, The Field Experiments Website.
    13. Chen, Daniel & Hopfensitz, Astrid & van Leeuwen, Boris & van de Ven, Jeroen, 2019. "The Strategic Display of Emotions," Discussion Paper 2019-014, Tilburg University, Center for Economic Research.

    More about this item

    Keywords

    Self-confidence; Overconfidence; Strategic deterrence; Unconscious behavior; Self-deception; Luring; Experiment;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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