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Gender Robustness of Overconfidence and Excess Entry

Author

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  • Danková, Katarína
  • Servátka, Maroš

Abstract

Camerer and Lovallo (1999) present a thought-provoking experimental evidence that overconfidence might lead to excess entry into markets. As their findings are based on the majority of the sessions exclusively consisting of male participants, we replicate their experiment while including both men and women in all of our sessions. We are able to only partially replicate their main finding that the market entry decisions are driven by overconfidence. Surprisingly we also find that self-selection significantly decreases the entry rate. However, this is also where we observe gender differences in the entry rate – males who self-select into the experiment actually enter more often, which is in line with Camerer & Lovallo’s observation. Our experiment thus points out that the overconfidence effect is sensitive to the participants’ gender and experimental conditions.

Suggested Citation

  • Danková, Katarína & Servátka, Maroš, 2018. "Gender Robustness of Overconfidence and Excess Entry," MPRA Paper 87147, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87147
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    File URL: https://mpra.ub.uni-muenchen.de/87147/1/MPRA_paper_87147.pdf
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    More about this item

    Keywords

    Experiment; Gender; Market Entry; Overconfidence; Real Effort; Replication; Robustness;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D2 - Microeconomics - - Production and Organizations
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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