Confidence and Career Choices: An Experiment

WZB Discussion Paper, SP II 2018–301r2, January 2018 (2nd revision June 2020)

54 Pages Posted: 20 Oct 2020

See all articles by Kai Barron

Kai Barron

WZB Berlin Social Science Center

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2020

Abstract

Confidence in one’s own abilities is often seen as an important determinant of being successful. Empirical evidence about how such beliefs about one’s own abilities causally influence choices is, however, sparse. In this paper, we use a stylized laboratory experiment to investigate the causal effect of an increase in confidence on two important choices made by workers in the labor market: (i) choosing between jobs with a payment scheme that depends heavily on ability [high earnings risk] and those that pay a fixed wage [low earnings risk], and (ii) the subsequent choice of how much effort to exert within the job. We find that an exogenous increase in confidence leads to an increase in subjects’ propensity to choose payment schemes that depend heavily on ability. This is detrimental for low ability workers due to high baseline levels of confidence.

Keywords: Overconfidence, experiment, beliefs, real-effort, career choices

JEL Classification: C91, D03, M50, J24

Suggested Citation

Barron, Kai, Confidence and Career Choices: An Experiment (July 1, 2020). WZB Discussion Paper, SP II 2018–301r2, January 2018 (2nd revision June 2020), Available at SSRN: https://ssrn.com/abstract=3684380 or http://dx.doi.org/10.2139/ssrn.3684380

Kai Barron (Contact Author)

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
10
Abstract Views
132
PlumX Metrics