DOES THE BETTER‐THAN‐AVERAGE EFFECT SHOW THAT PEOPLE ARE OVERCONFIDENT?: TWO EXPERIMENTS | Zendy

Benoît JeanPierre | Zendy; Dubra Juan | Zendy; Moore Don A. | Zendy

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DOES THE BETTER‐THAN‐AVERAGE EFFECT SHOW THAT PEOPLE ARE OVERCONFIDENT?: TWO EXPERIMENTS

Author(s) -

Benoît JeanPierre,

Dubra Juan,

Moore Don A.

Publication year - 2015

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1111/jeea.12116

Subject(s) - overconfidence effect , economics , population , bayesian probability , positive economics , psychology , actuarial science , microeconomics , econometrics , social psychology , sociology , mathematics , statistics , demography

We conduct two experimental tests of the claim that people are overconfident, using new tests of overplacement that are based on a formal Bayesian model. Our two experiments, on easy quizzes, find that people overplace themselves. More precisely, we find apparently overconfident data that cannot be accounted for by a rational population of expected utility maximizers who care only about money. The finding represents new evidence of overconfidence that is robust to the Bayesian critique offered by Benoît and Dubra (Jean‐Pierre Benoît and Juan Dubra (2011). “Apparent Overconfidence.” Econometrica , 79, 1591–1625). We discuss possible limitations of our results.

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