Overconfidence Can Improve an Agent's Relative and Absolute Performance in Contests

8 Pages Posted: 22 Dec 2009

See all articles by Sandra Ludwig

Sandra Ludwig

Ludwig Maximilian University of Munich (LMU)

Philipp C. Wichardt

University of Rostock - Department of Economics

Hanke Wickhorst

University of Muenster - Münster School of Business and Economics

Date Written: December 19, 2009

Abstract

This paper suggests a potential rationale for the recent empirical finding that overconfident agents tend to self-select into more competitive environments (e.g. Dohmen and Falk, 2006). In particular, it shows that moderate overconfidence in a contest can improve the agent's performance relative to an unbiased opponent and can even lead to an advantage of the overconfident agent in absolute terms.

Keywords: Overconfidence, Contests

JEL Classification: D21, D44, D82

Suggested Citation

Ludwig, Sandra and Wichardt, Philipp C. and Wickhorst, Hanke, Overconfidence Can Improve an Agent's Relative and Absolute Performance in Contests (December 19, 2009). Available at SSRN: https://ssrn.com/abstract=1526519 or http://dx.doi.org/10.2139/ssrn.1526519

Sandra Ludwig

Ludwig Maximilian University of Munich (LMU) ( email )

Ulm University
Helmholtzstrasse 18
Ulm, Baden-Württemberg 89081
Germany

Philipp C. Wichardt

University of Rostock - Department of Economics ( email )

Ulmenstr. 69
Rostock, 18057
Germany

Hanke Wickhorst (Contact Author)

University of Muenster - Münster School of Business and Economics ( email )

Scharnhorststr. 100
48151 Munster
Germany

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