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dc.contributor.authorMöbius, Markus M.en_US
dc.contributor.authorNiederle, Murielen_US
dc.contributor.authorNiehaus, Paulen_US
dc.contributor.authorRosenblat, Tanya S.en_US
dc.date.accessioned2011-12-19en_US
dc.date.accessioned2012-02-23T08:00:43Z-
dc.date.available2012-02-23T08:00:43Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/55580-
dc.description.abstractEvidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of Boston Boston, MAen_US
dc.relation.ispartofseriesWorking paper series // Federal Reserve Bank of Boston 11-14en_US
dc.subject.jelC91en_US
dc.subject.jelC93en_US
dc.subject.jelD83en_US
dc.subject.ddc330en_US
dc.titleManaging self-confidence: Theory and experimental evidenceen_US
dc.typeWorking Paperen_US
dc.identifier.ppn680150110en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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