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Self-confidence and strategic behavior

Published online by Cambridge University Press:  14 March 2025

Gary Charness,
Aldo Rustichini and
Jeroen van de Ven
Gary Charness*
Affiliation:
University of California at Santa Barbara, Santa Barbara, CA, USA
Aldo Rustichini*
Affiliation:
University of Minnesota, Minneapolis, MN, USA
Jeroen van de Ven*
Affiliation:
University of Amsterdam and Tinbergen Institute, Amsterdam, The Netherlands
*
charness@econ.ucsb.edu
arust@econ.umn.edu
j.vandeven@uva.nl
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Abstract

We suggest that overconfidence (conscious or unconscious) is motivated in part by strategic considerations, and test this experimentally. We find compelling supporting evidence in the behavior of participants who send and respond to others’ statements of confidence about how well they have scored on an IQ test. In two-player tournaments where the higher score wins, a player is very likely to choose to compete when he knows that his own stated confidence is higher than the other player’s, but rarely when the reverse is true. Consistent with this behavior, stated confidence is inflated by males when deterrence is strategically optimal and is instead deflated (by males and females) when luring (encouraging entry) is strategically optimal. This behavior is consistent with the equilibrium of the corresponding signaling game. Overconfident statements are used in environments that seem familiar, and we present evidence that suggests that this can occur on an unconscious level.

Keywords

Self-confidenceOverconfidenceStrategic deterrenceUnconscious behaviorSelf-deceptionLuringExperiment

JEL classification

A12: Relation of Economics to Other DisciplinesC91: Laboratory, Individual BehaviorD82: Asymmetric and Private Information • Mechanism Design

Information

Type
Original Paper
Information
Experimental Economics , Volume 21 , Issue 1 , March 2018, pp. 72 - 98
Copyright
Copyright © 2017 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-017-9526-3) contains supplementary material, which is available to authorized users.

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