The curse of knowledge increases self-selection into competition: Experimental evidence

The psychology literature provides ample evidence that people have difficulties taking the perspective of less-informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses.

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Year of publication:	2014
Authors:	Danz, David
Institutions:	Abteilung "Verhalten auf Märkten", Wissenschaftszentrum Berlin für Sozialforschung (WZB)
Subject:	curse of knowledge \| hindsight bias \| information projection \| overconfidence \| sorting \| incentive schemes \| competition \| beliefs \| experiments

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Extent:	application/pdf
Series:	Discussion Papers, Research Unit: Market Behavior.
Type of publication:	Book / Working Paper
Notes:	Number SP II 2014-207
Classification:	C91 - Laboratory, Individual Behavior ; D80 - Information and Uncertainty. General ; D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; D84 - Expectations; Speculations
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010955334