Confidence and Career Choices: An Experiment

Wissenschaftszentrum Berlin für Sozialforschung Discussion Paper SP II 2018–301

59 Pages Posted: 15 Jan 2018

See all articles by Kai Barron

Kai Barron

WZB Berlin Social Science Center

Christina Gravert

University of Gothenburg

Multiple version iconThere are 2 versions of this paper

Date Written: January 10, 2018

Abstract

Confidence is often seen as the key to success. Empirical evidence about whether such beliefs causally map into actions is, however, sparse. In this paper, we experimentally investigate the causal effect of an increase in confidence about one’s own ability on two central choices made by workers in the labor market: choosing between jobs with different incentive schemes, and the subsequent choice of how much effort to exert within the job. Using a hard-easy task manipulation to shift beliefs, we find that beliefs can be shifted, which in turn shifts decisions. In our setting, the beliefs of low ability individuals are more malleable than those of high ability individuals. Therefore, the treatment induces an increase in confidence and detrimental decision making by low ability workers but does not affect the outcomes of high ability workers. Men and women react similarly to the treatment. However, men hold higher baseline beliefs, implying that women make better incentive choice decisions. Policy implications regarding pre-labor market confidence development by means of feedback and grade inflation are discussed.

Keywords: Overconfidence, Experiment, Beliefs, Real-Effort, Grade Inflation

JEL Classification: C91, D03, M50, J24

Suggested Citation

Barron, Kai and Gravert, Christina, Confidence and Career Choices: An Experiment (January 10, 2018). Wissenschaftszentrum Berlin für Sozialforschung Discussion Paper SP II 2018–301, Available at SSRN: https://ssrn.com/abstract=3099491 or http://dx.doi.org/10.2139/ssrn.3099491

Kai Barron

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

HOME PAGE: http://sites.google.com/site/kaibarron/

Christina Gravert (Contact Author)

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

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