Self Confidence: Intrapersonal Strategies
Princeton University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
University of Toulouse 1 - Industrial Economic Institute (IDEI); University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ); Centre for Economic Policy Research (CEPR)
Woodrow Wilson School Working Paper No. 209
This paper analyzes the self-identification process and its role in motivation. We build a model of self-confidence where people have imperfect knowledge about their ability, which in most tasks is a complement to effort in determining performance. Higher self-confidence thus enhances motivation, and this creates incentives for the manipulation of self-perception. An individual suffering from time-inconsistency may thus want to enhance the self-confidence of his future selves, so as to limit their procrastination. The benefits of confidence-maintenance must, however, be traded off against the risks of overconfidence (inappropriate tasks being pursued). Moreover, rational inference implies that the individual cannot systematically fool himself. A first application of the model is self-handicapping: to avoid a negative inference about their ability, people may deliberately impair their performance, or choose overambitious tasks. Another application is selective memory or awareness management: people are (endogenously) more likely to remember or consciously acknowledge their successes than their failures. This, in turn, helps explain the widely documented prevalence of self--serving beliefs --that is, the fact that most people have overoptimistic assessments of their own abilities and other desirable traits. We analyze the workings of this "psychological immune system" and show that it typically leads to multiple equilibria in cognitive strategies, self confidence, and behavior. Moreover, while active self-esteem maintenance can improve ex-ante welfare, it can also be self-defeating. Systematically "looking on the bright side", avoiding "negative" thoughts and people, etc., can thus be beneficial in certain environments; but in other circumstances one can only lose by playing such games with oneself, and it would be better to always "accept who you are" and "be honest with yourself".
Number of Pages in PDF File: 51
JEL Classification: A12, C70, D60, D91, E21, J22, J24working papers series
Date posted: April 10, 2000
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