Overconfident: Do You Put Your Money on it?

14 Pages Posted: 2 Apr 2005

See all articles by Erik Hoelzl

Erik Hoelzl

University of Cologne

Aldo Rustichini

University of Minnesota - Twin Cities - Department of Economics

Abstract

A group exhibits overconfidence if significantly more than half the group members declare to be better than the median in some characteristic. Overconfidence was found in verbal reports for a variety of characteristics and settings but was less often studied for choice behaviour. In an experiment we tested how perceived relative skill influences verbal and choice behaviour. Treatments varied task difficulty and payment. Choice behaviour changes from overconfidence to underconfidence when the task changes from easy and familiar to non-familiar. This effect is significant when monetary payments are at stake and weak when they are not.

Suggested Citation

Hoelzl, Erik and Rustichini, Aldo, Overconfident: Do You Put Your Money on it?. Economic Journal, Vol. 115, No. 503, pp. 305-318, April 2005. Available at SSRN: https://ssrn.com/abstract=696965

Erik Hoelzl (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Aldo Rustichini

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

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