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Overconfidence and prejudice
Heidhues, Paul; Kőszegi, Botond; Strack, Philipp - 2024
We develop a model in which an overconfident agent learns about groups in society from observations of his and others' successes. In our model, both the agent's information and his beliefs are multi-dimensional, allowing us to study interactions between different views. Overall, society always...
Persistent link: https://www.econbiz.de/10014578270
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Can communication mitigate strategic delays in investment timing?
Mermer, Ayse; Onderstal, Sander; Sonnemans, Joep - 2022
investment timings. Players choose when to invest in a nonrival project with uncertain returns. The earliest investor bears the … costs of investment and all players learn whether the project is of good or bad quality. Informational externalities create … free-riding incentives resulting in strategic delays in investment timings. Our theoretical analysis suggests that …
Persistent link: https://www.econbiz.de/10013375345
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Trustworthy by Design
Geng, Sen; Guan, Menglong - 2021
We explore theoretically and experimentally whether information design can be used by trustees as a signaling device to boost trusting acts in once-off interactions. In our main setting, a trustee partially or fully decides a binary payoff allocation and designs an information structure, then a...
Persistent link: https://www.econbiz.de/10013233915
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Unpacking Overconfident Behavior When Betting on Oneself
Abdellaoui, Mohammed; Bleichrodt, Han; Gutierrez, Cédric - 2023
Overconfident behavior, the excessive willingness to bet on one’s performance, may be driven by optimistic beliefs and/or ambiguity attitudes. Separating these factors is key for understanding and correcting overconfident behavior, as they may call for different corrective actions. We present...
Persistent link: https://www.econbiz.de/10014350225
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Anxiety, overconfidence, and excessive risk taking
Eisenbach, Thomas M.; Schmalz, Martin C. - 2015
We provide a preference-based rationale for endogenous overconfidence. Horizon-dependent risk aversion, combined with a possibility to forget, can generate overconfidence and excessive risk taking in equilibrium. An "anxiety prone" agent, who is more risk-averse to imminent than to distant...
Persistent link: https://www.econbiz.de/10010482950
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It's not my fault! : self-confidence and experimentation
Hestermann, Nina; Le Yaouanq, Yves - 2018 - Current draft: October 8, 2018
variable environments and revise their self-confidence over time. In contrast, underconfident decision-makers might be trapped …
Persistent link: https://www.econbiz.de/10011930663
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Overconfidence?
Benoit, Jean-Pierre; Dubra, Juan - 2009
Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better than average. The literature takes for granted that this better-than-average effect is problematic. We argue, however, that, even...
Persistent link: https://www.econbiz.de/10014220605
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Persistent overconfidence and biased memory : evidence from managers
Huffman, David; Raymond, Collin; Shvets, Julia - 2023
A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods we...
Persistent link: https://www.econbiz.de/10014311540
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The Role of Information in Building Reputation in an Investment/Trust Game
Lunawat, Radhika - 2012
This article analyzes the role of information in building reputation in an investment/trust game. The model allows for …
Persistent link: https://www.econbiz.de/10013098371
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Limelight on dark markets : an experimental study of liquidity and information
Berentsen, Aleksander; McBride, Michael; Rocheteau, … - 2013
The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory setting. The experiments replicate an OTC market similar to the one used in monetary and financial economics (Shi, 1995; Trejos and Wright, 1995; Duffie, Garleanu, and Pedersen, 2005):...
Persistent link: https://www.econbiz.de/10009763984