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Self-Confidence and Strategic Deterrence

Author

Listed:
  • Gary Charness

    (UCSB)

  • Aldo Rustichini

    (University of Minnesota)

  • Jeroen van de Ven

    (University of Amsterdam)

Abstract

We examine factors that may contribute to 'overconfidence' in relative ability on an intelligence test. We test experimentally for evidence of self-esteem concerns and instrumental strategic concerns. Errors in Bayesian updating are rare when the information does not involve own relative ability, but far more common when it does, suggesting self-esteem issues. There is also strong evidence that males state higher levels of confidence in relative ability when this precedes a tournament; as entry is predicted by relative confidence, this can be an effective deterrent. Inflating confidence can be part of an equilibrium strategy, providing a rationale for strategic overconfidence.

Suggested Citation

  • Gary Charness & Aldo Rustichini & Jeroen van de Ven, 2011. "Self-Confidence and Strategic Deterrence," Tinbergen Institute Discussion Papers 11-151/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20110151
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    File URL: https://papers.tinbergen.nl/11151.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Grossman, Zachary & Owens, David, 2012. "An unlucky feeling: Overconfidence and noisy feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 510-524.
    2. Basteck, Christian & Mantovani, Marco, 2018. "Cognitive ability and games of school choice," Games and Economic Behavior, Elsevier, vol. 109(C), pages 156-183.
    3. Christian Basteck & Marco Mantovani, 2016. "Protecting Unsophisticated Applicants in School Choice through Information Disclosure," SFB 649 Discussion Papers SFB649DP2016-036, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    4. repec:hal:spmain:info:hdl:2441/1pol0t9ish8aibtfnljt1dn7he is not listed on IDEAS
    5. Sidartha Gordon & Alessandro Riboni, 2015. "Doubts and Dogmatism in Conflict Behaviour," Economic Journal, Royal Economic Society, vol. 125(589), pages 1790-1817, December.
    6. Jordi Brandts & Valeska Groenert & Christina Rott, 2015. "The Impact of Advice on Women's and Men's Selection into Competition," Management Science, INFORMS, vol. 61(5), pages 1018-1035, May.
    7. repec:hal:wpspec:info:hdl:2441/1pol0t9ish8aibtfnljt1dn7he is not listed on IDEAS
    8. Proto, Eugenio & Rustichini, Aldo & Sofianos, Andis, 2014. "Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma," IZA Discussion Papers 8499, Institute of Labor Economics (IZA).
    9. Li, Ying Xue & Schipper, Burkhard C., 2020. "Strategic reasoning in persuasion games: An experiment," Games and Economic Behavior, Elsevier, vol. 121(C), pages 329-367.
    10. Grossman, Zachary & Owens, David, 2012. "An unlucky feeling: Overconfidence and noisy feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 510-524.
    11. Proto, Eugenio & Rustichini, Aldo & Sofianos, Andis, 2015. "Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma," CAGE Online Working Paper Series 255, Competitive Advantage in the Global Economy (CAGE).
    12. Thomas Buser & Leonie Gerhards & Joël Weele, 2018. "Responsiveness to feedback as a personal trait," Journal of Risk and Uncertainty, Springer, vol. 56(2), pages 165-192, April.
    13. Burkhard Schipper & Ying Xue Li, 2018. "Strategic Reasoning in Persuasion Games: An Experiment," Working Papers 181, University of California, Davis, Department of Economics.
    14. Syngjoo Choi & Byung-Yeon Kim & Jungmin Lee & Sokbae Lee, 2021. "Why North Korean Refugees are Reluctant to Compete: The Roles of Cognitive Ability," Papers 2108.08097, arXiv.org, revised Aug 2023.
    15. Christian Basteck & Marco Mantovani, 2016. "Protecting Unsophisticated Applicants in School Choice through Information Disclosure," SFB 649 Discussion Papers SFB649DP2016-036, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    16. Anya Samek, 2019. "Gender Differences in Job Entry Decisions: A University-Wide Field Experiment," Management Science, INFORMS, vol. 65(7), pages 3272-3281, July.
    17. Eugenio Proto & Aldo Rustichini & Andis Sofianos, 2019. "Intelligence, Personality, and Gains from Cooperation in Repeated Interactions," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1351-1390.
    18. Gill, David & Prowse, Victoria, 2012. "Cognitive ability and learning to play equilibrium: A level-k analysis," MPRA Paper 38317, University Library of Munich, Germany, revised 23 Apr 2012.

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    More about this item

    Keywords

    Self-confidence; overconfidence; strategic deterrence; unconscious behavior; selfdeception;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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