Overconfidence in Forecasts of Own Performance: An Experimental Study

Jeremy Clark and Lana Friesen

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: Overconfidence can have important economic consequences, but has received little direct testing within the discipline. We test for overconfidence in forecasts of own absolute or relative performance in two unfamiliar experimental tasks. Given their choice of effort at the tasks, participants have incentives to forecast accurately, and have opportunities for feedback, learning and revision. Forecast accuracy is evaluated at both the aggregate level, and at the individual level using realized outcomes. We find very limited evidence of overconfidence, with zero mean error or under-confidence more prevalent. Under-confidence is greatest in tasks with absolute rather than relative win criteria, often among subjects using greater or "smarter" effort.

Keywords: Overconfidence; forecast errors; self-assessment (search for similar items in EconPapers)
JEL-codes: C91 D83 D84 J24 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-03-01
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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https://repec.canterbury.ac.nz/cbt/econwp/0609.pdf (application/pdf)

Related works:
Journal Article: Overconfidence in Forecasts of Own Performance: An Experimental Study (2009)
Journal Article: Overconfidence in Forecasts of Own Performance: An Experimental Study (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:06/09

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