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Does the better –than- average effect show that people are Overconfident?: two experiments

Listed author(s):
  • Jean-Pierre Benoit
  • Juan Dubra

    ()

  • Don Moore
Registered author(s):

    We conduct two experiments of the claim that people are overconfident, using new tests of overplacement that are based on a formal Bayesian model. Our two experi- ments, on easy quizzes, find overplacement. More precisely, we find apparently over- confident data that cannot be accounted for by a rational population of expected utility maximizers with a good understanding of the nature of the quizzes they took. The finding is of particular interest because Benoit and Dubra (2011) have shown that the vast majority of the existing findings on the better-than-average efect are actually consistent with Bayesian updating.

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    File URL: http://www.um.edu.uy/docs/working_paper_um_cee_2013_01.pdf
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    Paper provided by Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. in its series Documentos de Trabajo/Working Papers with number 1301.

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    Date of creation: 2013
    Handle: RePEc:mnt:wpaper:1301
    Contact details of provider: Postal:
    Prudencio de Pena 2440, Montevideo 11600

    Web page: http://www.um.edu.uy/cee/

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    1. Guillaume Hollard & Sébastien Massoni & Jean-Christophe Vergnaud, 2010. "Subjective beliefs formation and elicitation rules : experimental evidence," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00543828, HAL.
    2. Diego García & Francesco Sangiorgi & Branko Urošević, 2007. "Overconfidence and Market Efficiency with Heterogeneous Agents," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 313-336, February.
    3. Peng, Lin & Xiong, Wei, 2006. "Investor attention, overconfidence and category learning," Journal of Financial Economics, Elsevier, vol. 80(3), pages 563-602, June.
    4. Jean‐Pierre Benoît & Juan Dubra, 2011. "Apparent Overconfidence," Econometrica, Econometric Society, vol. 79(5), pages 1591-1625, 09.
    5. McKelvey, Richard D & Page, Talbot, 1990. "Public and Private Information: An Experimental Study of Information Pooling," Econometrica, Econometric Society, vol. 58(6), pages 1321-1339, November.
    6. Erik Hoelzl & Aldo Rustichini, 2005. "Overconfident: Do You Put Your Money On It?," Economic Journal, Royal Economic Society, vol. 115(503), pages 305-318, 04.
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