Overconfidence Increases Productivity
31 Pages Posted: 4 Aug 2011
Date Written: August 2, 2011
Recent studies report that productivity increases under tournament reward structures than under piece rate reward structures. We conduct maze-solving experiments under both reward structures and reveal that overconfidence is a significant factor in increasing productivity. Specifically, subjects exhibiting progressively higher degrees of overconfidence solve more mazes. This result shows a positive aspect of overconfidence, which usually has been examined in its negative aspect as an expectation bias.
Keywords: expectation, overconfidence, reward structure, productivity, experiment
JEL Classification: C9, D03, J33
Suggested Citation: Suggested Citation