Confidence-Enhanced Performance, Third Version

35 Pages Posted: 1 Jun 2004

See all articles by Olivier Compte

Olivier Compte

Paris School of Economics (PSE); Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS)

Andrew Postlewaite

University of Pennsylvania - Department of Economics

Date Written: May 2003

Abstract

There is ample evidence that emotions affect performance. Positive emotions can improve performance, while negative ones may diminish it. For example, the fears induced by the possibility of failure or of negative evaluations have physiological consequences (shaking, loss of concentration) that may impair performance in sports, on stage or at school.

There is also ample evidence that individuals have distorted recollection of past events, and distorted attributions of the causes of successes of failures. Recollection of good events or successes is typically easier than recollection of bad ones or failures. Successes tend to be attributed to intrinsic aptitudes or own effort, while failures are attributed to bad luck. In addition, these attributions are often reversed when judging the performance of others.

The objective of this paper is to incorporate the first phenomenon above into an otherwise standard decision theoretic model, and show that in a world where performance depends on emotions, biases in information processing enhance welfare.

Note: A previous version of this paper can be found at: http://ssrn.com/abstract=392684

Keywords: Confidence, Perception, Psychology

JEL Classification: D8

Suggested Citation

Compte, Olivier and Postlewaite, Andrew, Confidence-Enhanced Performance, Third Version (May 2003). Available at SSRN: https://ssrn.com/abstract=549162 or http://dx.doi.org/10.2139/ssrn.549162

Olivier Compte

Paris School of Economics (PSE)

48 Boulevard Jourdan
Paris, 75014 75014
France

Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS) ( email )

28, rue des Saints-Peres
75007 Paris
France

Andrew Postlewaite (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7350 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.econ.upenn.edu/~apostlew

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