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How do risk attitudes affect measured confidence?

Listed author(s):
  • Zahra Murad

    ()

    (School of Economics, University of Nottingham)

  • Chris Starmer

    ()

    (Department of Economics, University of Amsterdam)

  • Martin Sefton

    ()

    (School of Economics, University of Nottingham)

We examine confidence in own absolute performance using two 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" (overconfidence in easy tasks and underconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is somewhat reduced when we filter out the effects of risk attitudes. However, even after controlling for risk attitudes our incentivised procedure leads to significant underconfidence, and does not lead to better calibration between confidence and performance than non-incentivised self-reports. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting.

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File URL: http://www.nottingham.ac.uk/cedex/documents/papers/cedex-discussion-paper-2015-26.pdf
File Function: Revised Version, November 2015
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Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2014-05.

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Date of creation: May 2014
Handle: RePEc:not:notcdx:2014-05
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School of Economics University of Nottingham University Park Nottingham NG7 2RD

Phone: (44) 0115 951 5620
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Web page: http://www.nottingham.ac.uk/economics/cedex/

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