Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161168
Authors: 
Cheung, Stephen L.
Johnstone, Lachlan
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 10545
Abstract: 
We report an experiment that infers true overconfidence in relative ability through actions, as opposed to reported beliefs. Subjects choose how to invest earnings from a skill task when the returns depend solely upon risk, or both risk and relative placement, enabling joint estimation of individual risk preferences and implied subjective beliefs of placing in the top half. We find evidence of aggregate overconfidence only in a treatment that receives minimal feedback on performance in a trial task. In treatments that receive more detailed feedback, aggregate overconfidence is not observed although identifiable segments of overand underconfident individuals persist.
Subjects: 
true overconfidence
overplacement
subjective beliefs
joint estimation
JEL: 
C91
D03
D81
D83
Document Type: 
Working Paper

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