Self-Confidence and Reactions to Subjective Performance Evaluations

39 Pages Posted: 21 Feb 2019

See all articles by Charles Bellemare

Charles Bellemare

Université Laval - Département d'Économique; Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE); IZA Institute of Labor Economics

Alexander Sebald

University of Copenhagen - Department of Economics

Date Written: 2018

Abstract

Subjective performance evaluations are commonly used to provide feedback and incentives to workers. However, such evaluations can generate significant disagreements and conflicts, the severity of which may be driven by many factors. In this paper we show that a workers’ level of self-confidence plays a central role in shaping reactions to subjective evaluations - overconfident agents engage in costly punishment when they receive evaluations below their own, but provide limited rewards to principals when evaluations exceed their own. In contrast, underconfident agents do not significantly react to evaluations below their own, but reward significantly evaluations exceeding their own. Our analysis exploits data from a principal-agent experiment run with a large sample of the Danish working age population, varying the financial consequences associated with the evaluations workers receive. In contrast to existing economic models of reciprocal behavior, reactions to evaluations are weakly related to the financial consequences of the evaluations. These results point towards a behavioral model of reciprocity that intertwines the desire to protect self-perceptions with over-/underconfidence.

Keywords: subjective performance evaluations, self-confidence, reciprocity

JEL Classification: D010, D020, D820, D860, J410

Suggested Citation

Bellemare, Charles and Sebald, Alexander, Self-Confidence and Reactions to Subjective Performance Evaluations (2018). CESifo Working Paper No. 7325, Available at SSRN: https://ssrn.com/abstract=3338654

Charles Bellemare (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE)

Pavillon De Sève
Ste-Foy, Quebec G1K 7P4
Canada

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Alexander Sebald

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

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