This is the accepted version of the paper.This version of the publication may differ from the final published version.
Permanent repository link
Do positive illusions predict overconfidence in judgment?A test using interval production and probability evaluation measures of miscalibration
AbstractWe address the question as to whether judgmental overconfidence, as assessed by probability miscalibration, is related to positive illusions about the self. We first demonstrate that judgmental overconfidence measured with interval production procedures can be considered a trait, due to correlations observed in miscalibration scores in two sets of general-knowledge questions of varying difficulty administered at different times. In addition, the hard-easy effect operated in different ways on overprecision and self-placement of one's performance relative to others: the more difficult the calibration task, the greater the overprecision but the greater the underplacement of one's performance. Finally, there was no evidence that miscalibration was related to dispositional optimism and self-efficacy. A second study extended these results by including further measures of disposition to experience positive illusions such as unrealistic optimism, a general tendency to consider oneself "better-than-average", and two indexes of dispositional perception of control. The positive illusion measures showed considerable inter-correlations, but did not correlate with miscalibration on the interval production task, and correlated negatively with optimism concerning societal risks. A final study replicated this pattern of findings, but showed that disposition to positive illusions did predict miscalibration on the same questions measured with a probability evaluation technique. Our research demonstrates that "overconfidence" is not a unitary construct, but a series of overlapping ones. Langer & Roth, 1975), unrealistic optimism (i.e. they consider that bad events are more likely to happen to others than to themselves; Weinstein, 1982) and the "better-thanaverage" effect (i.e. they overestimate their achievements and abilities relative to others; Svenson, 1981). The above literature in psychology has been cited by behavioral finance researchers to support the claim that people are overconfident, and that this is likely to lead them to make errors in financial markets (Barber & Odean, 2000;2001;Odean, 1998; for a review, see Glaser, Nöth, & Weber, 2004).Nevertheless one may ask whether these different forms of overconfidence are actually related to each other. Moore and Healy (2008) have distinguished between three kinds of overconfidence: Overprecision (overestimating the precision of one's knowledge), overplacement (overestimating one's ranking in a group) and overestimation (overestimating the quality of one's performance), and present experimental evidence to show that these judgments can be dissociated. At a more specific level, Griffin and Brenner (2004) distinguish five theoretical perspectives on calibration of probability judgment...
