Does the Better-Than-Average Effect Show That People Are Overconfident?: Two Experiments

Benoı̂t, Jean-Pierre; Dubra, Juan; Moore, Don A.

doi:10.1111/jeea.12116

Cited by 80 publications

(85 citation statements)

References 62 publications

(109 reference statements)

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“…Interestingly, Benoît et al . () report results from two experiments that cannot be produced by rational Bayesian updaters, providing clean evidence for overconfidence.…”

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confidence: 95%

Information Processing and Commitment

Falk

Zimmermann

2017

The Economic Journal

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Beliefs are often found to be sticky and rather immune to new information. In this article, we highlight a specific mechanism that raises resistance to incorporate new information. We provide causal evidence that commitment to a first opinion leads to a neglect of new and challenging information. Being asked to write down an initial estimate before additional information is obtained significantly and substantially reduces the accuracy of final beliefs. Investigating the sources of this effect, we show that our findings are well explained by an internal desire to act consistently.

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“…Interestingly, Benoît et al . () report results from two experiments that cannot be produced by rational Bayesian updaters, providing clean evidence for overconfidence.…”

mentioning

confidence: 95%

Information Processing and Commitment

Falk

Zimmermann

2017

The Economic Journal

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“…In other words, evidence in the form “40% of subjects place themselves in the top 20% of good car drivers” should not be interpreted as evidence for overconfident self‐assessments as it can be the outcome of correct updating from unbiased information. Interestingly, Benoît, Dubra, and Moore () report results from two experiments that cannot be produced by rational Bayesian updaters, providing clean evidence for overconfidence. While all approaches are important and in concert provide a good explanation for documented behavior, our experimental results highlight the crucial role of image concerns for stated self‐assessments.…”

Section: Introductionmentioning

confidence: 99%

Image and Misreporting

Ewers

Zimmermann

2015

Journal of the European Economic Association

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In this paper we analyze how image utility can lead to misreporting of private information in contexts where truthful reports maximize monetary outcomes. In a controlled experiment, subjects go through a series of quiz questions and subsequently report a performance measure. We vary whether reports are made to an audience or not. In an additional feedback treatment, reports are also stated to an audience and afterwards the experimenter publicly verifies whether reports were correct. We find that in the audience treatment, stated reports are significantly higher relative to the private treatment as well as the feedback treatment. Our findings suggest that overconfident appearance might be a consequence of social approval seeking. (JEL: C91, D03, D82, D83)

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“…These papers provide some motivation for our study but we do not undertake to match their frameworks. 6 Neither do we investigate the reasons a person might favour self-bets; instead we evaluate 3 Klein et al (2010) explores the relation between ambiguity, controllability and competence. 4 Thus, for Goodie a control motive is present when a person could improve on future answers to questions by studying or improve on future performance on an activity by practicing.…”

Section: Betting On Yourself: Controlmentioning

confidence: 99%

“…It is impossible to tell to what extent these losses re ‡ected overcon…dence and to what extent a sacri…ce for non-monetary objectives. 6 Indeed, there are elements of these papers which we want to avoid. For instance, in Heath and Tversky's second and third experiments, subjects are asked to rate their knowledge of the subject matter in addition to their probability of answering a question correctly, which could have an e¤ect on their subsequent behavior.…”

Section: Betting On Yourself: Controlmentioning

confidence: 99%

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Belief Elicitation When More Than Money Matters

2019

Self Cite

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Incentive compatible mechanisms for eliciting beliefs typically presume that money is the only argument in people's utility functions. However, subjects may also have nonmonetary objectives that confound the mechanisms. In particular, psychologists have argued that people favour bets where their ability is involved over equivalent random bets-a so-called preference for control. We propose a new belief elicitation method that mitigates the control preference. With the help of this method, we determine that under the ostensibly incentive compatible matching probabilities method (Ducharme and Donnell (1973)), our subjects report beliefs 7% higher than their true beliefs in order to increase their control. Non-monetary objectives account for at least 27% of what would normally be measured as overcon…dence. Our paper also contributes to a re…ned understanding of control.

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Does the Better-Than-Average Effect Show That People Are Overconfident?: Two Experiments

Cited by 80 publications

References 62 publications

Information Processing and Commitment

Information Processing and Commitment

Image and Misreporting

Belief Elicitation When More Than Money Matters

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