We test the hypothesis that strategic interactions foster overconfidence. We experimentally compare an environment where players have an incentive to overstate their own ability to deter competitors, with one where this incentive is removed. We find that overconfidence persists in the former...

Any competitive process selects among qualities possessed by the competitors, and with different processes selecting for different qualities. While the competitive form is universal, the substantive qualities that are selected depend on the particular environment within which competition occurs....