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Overconfidence Increases Productivity

  • Yusuke Kinari
  • Noriko Mizutani
  • Fumio Ohtake
  • Hiroko Okudaira

Recent studies report that productivity increases under tournament reward structures than under piece rate reward structures. We conduct maze-solving experiments under both reward structures and reveal that overconfidence is a significant factor in increasing productivity. Specifically, subjects exhibiting progressively higher degrees of overconfidence solve more mazes. This result shows a positive aspect of overconfidence, which usually has been examined in its negative aspect as an expectation bias.

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File URL: http://www.iser.osaka-u.ac.jp/library/dp/2011/DP0814.pdf
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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0814.

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Date of creation: 01 Aug 2011
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Handle: RePEc:dpr:wpaper:0814
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  1. Hirshleifer, David & Low, Angie & Teoh, Siew Hong, 2010. "Are Overconfident CEOs Better Innovators?," MPRA Paper 22425, University Library of Munich, Germany.
  2. Freeman, Richard B. & Gelber, Alexander M., 2008. "Prize Structure and Information in Tournaments: Experimental Evidence," MPRA Paper 12156, University Library of Munich, Germany.
  3. Muriel Niederle & Lise Vesterlund, 2005. "Do Women Shy Away From Competition? Do Men Compete Too Much?," NBER Working Papers 11474, National Bureau of Economic Research, Inc.
  4. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-74, June.
  5. Brad M. Barber & Terrance Odean, 2001. "Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 261-292, February.
  6. Uri Gneezy & Muriel Niederle & Aldo Rustichini, 2003. "Performance In Competitive Environments: Gender Differences," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 1049-1074, August.
  7. Alberto Galasso & Timothy S. Simcoe, 2010. "CEO Overconfidence and Innovation," NBER Working Papers 16041, National Bureau of Economic Research, Inc.
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