Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101453
Authors: 
Danz, David
Year of Publication: 
2014
Series/Report no.: 
WZB Discussion Paper SP II 2014-207
Abstract: 
The psychology literature provides ample evidence that people have difficulties taking the perspective of less-informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses.
Subjects: 
curse of knowledge
hindsight bias
information projection
overconfidence
sorting
incentive schemes
competition
beliefs
experiments
JEL: 
C91
D80
D82
D83
D84
Document Type: 
Working Paper

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