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How do risk attitudes affect measured confidence?

Author

Listed:
  • Zahra Murad

    (University of Nottingham
    University of Surrey)

  • Martin Sefton

    (University of Nottingham)

  • Chris Starmer

    (University of Nottingham)

Abstract

We examine the relationship between confidence in own absolute performance and risk attitudes using two confidence elicitation procedures: self-reported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the “hard-easy effect” (underconfidence in easy tasks and overconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is significantly reduced, but not eliminated when we filter out the effects of risk attitudes. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting.

Suggested Citation

  • Zahra Murad & Martin Sefton & Chris Starmer, 2016. "How do risk attitudes affect measured confidence?," Journal of Risk and Uncertainty, Springer, vol. 52(1), pages 21-46, February.
    • Handle: RePEc:kap:jrisku:v:52:y:2016:i:1:d:10.1007_s11166-016-9231-1
    DOI: 10.1007/s11166-016-9231-1
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