Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/69592 
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper No. 4084
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism leads to an innovation enhancing effect, judgmental overconfidence inhibits innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.
Subjects: 
innovation
entrepreneurship
overconfidence
experiment
JEL: 
C92
D83
D23
Document Type: 
Working Paper
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