Underestimating Learning by Doing

26 Pages Posted: 12 Oct 2021

See all articles by Samantha Horn

Samantha Horn

Carnegie Mellon University

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Date Written: October 12, 2021

Abstract

Many economic decisions, such as whether to invest in developing new skills, change professions, or purchase a new technology, benefit from accurate estimation of skill acquisition. We examine the accuracy of such predictions by having experimental participants predict the speed at which they will master an unfamiliar task. The first experiment finds systematic underestimation of learning, even after multiple rounds of performance feedback. Replicating earlier findings by psychologists, we observe an abrupt drop in confidence, from overconfidence to underconfidence, following initial task experience. The second experiment shows that underpredicting learning leads decision makers to make choices that lower average payoffs.

Keywords: learning, beliefs, forecasting

JEL Classification: C91, D83, D91

Suggested Citation

Horn, Samantha and Loewenstein, George F., Underestimating Learning by Doing (October 12, 2021). Available at SSRN: https://ssrn.com/abstract=3941441 or http://dx.doi.org/10.2139/ssrn.3941441

Samantha Horn (Contact Author)

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

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

Paper statistics

Downloads
180
Abstract Views
1,006
rank
229,963
PlumX Metrics