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Overconfidence

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  • Jean-Pierre Benoit
  • Juan Dubra

Abstract

Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better-than-average. The literature takes for granted that this better-than-average is problematic. We argue, however, that, even accepting these studies on their own terms, there is nothing at all wrong with a strict majority of people rating themselves above the median.
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Suggested Citation

  • Jean-Pierre Benoit & Juan Dubra, 2008. "Overconfidence," NajEcon Working Paper Reviews 122247000000002148, www.najecon.org.
    • Handle: RePEc:cla:najeco:122247000000002148
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    References listed on IDEAS

    as
    1. Markus Noth & Martin Weber, 2003. "Information Aggregation with Random Ordering: Cascades and Overconfidence," Economic Journal, Royal Economic Society, vol. 113(484), pages 166-189, January.
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    3. Camerer, Colin, "undated". "Progress and Behavioral Game Theory," Working Papers 1004, California Institute of Technology, Division of the Humanities and Social Sciences.
    4. Jose A. Scheinkman & Wei Xiong, 2003. "Overconfidence and Speculative Bubbles," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1183-1219, December.
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    9. Menkhoff, Lukas & Schmidt, Ulrich & Brozynski, Torsten, 2006. "The impact of experience on risk taking, overconfidence, and herding of fund managers: Complementary survey evidence," European Economic Review, Elsevier, vol. 50(7), pages 1753-1766, October.
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    Citations

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    Cited by:

    1. Markus M. Mobius & Muriel Niederle & Paul Niehaus & Tanya Rosenblat, 2011. "Managing self-confidence: theory and experimental evidence," Working Papers 11-14, Federal Reserve Bank of Boston.
    2. Merkle, Christoph & Weber, Martin, 2011. "True overconfidence: The inability of rational information processing to account for apparent overconfidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 116(2), pages 262-271.
    3. Herz, Holger & Schunk, Daniel & Zehnder, Christian, 2014. "How do judgmental overconfidence and overoptimism shape innovative activity?," Games and Economic Behavior, Elsevier, vol. 83(C), pages 1-23.
    4. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    5. Jean‐Pierre Benoît & Juan Dubra, 2011. "Apparent Overconfidence," Econometrica, Econometric Society, vol. 79(5), pages 1591-1625, September.
    6. Ravazzolo, Francesco & Røisland, Øistein, 2011. "Why do people place lower weight on advice far from their own initial opinion?," Economics Letters, Elsevier, vol. 112(1), pages 63-66, July.
    7. Néstor Gándelman & Rubén Hernández-Murillo, 2009. "The impact of inflation and unemployment on subjective personal and country evaluations," Review, Federal Reserve Bank of St. Louis, issue May, pages 107-126.
    8. Ertac, Seda, 2011. "Does self-relevance affect information processing? Experimental evidence on the response to performance and non-performance feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 532-545.
    9. Grieco, Daniela & Hogarth, Robin M., 2009. "Overconfidence in absolute and relative performance: The regression hypothesis and Bayesian updating," Journal of Economic Psychology, Elsevier, vol. 30(5), pages 756-771, October.
    10. Juan Dubra & Rafael Di Tella, 2011. "Free to Punish? The American Dream and the harsh Treatment of Criminals," Documentos de Trabajo/Working Papers 1105, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    11. Rafael Di Tella & Juan Dubra, 2011. "Free to Punish? The American Dream and the Harsh Treatment of Criminals," NBER Working Papers 17309, National Bureau of Economic Research, Inc.
    12. Benoît, Jean-Pierre & Dubra, Juan & Moore, Don, 2009. "Does the Better-Than-Average Effect Show That People Are Overconfident?: An Experiment," MPRA Paper 13168, University Library of Munich, Germany.
    13. Akiko Maruyama, 2010. "Learning about one’s own type in two-sided search," GRIPS Discussion Papers 10-26, National Graduate Institute for Policy Studies.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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