Looking at the bright side: The motivational value of confidence

The motivational value of confidence postulates that individual effort provision is increasing in beliefs on one’s own ability. This relation is supposed to also hold for overconfident individuals who have exaggerated ability beliefs. We present the first empirical evidence on the existence of a mot...

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Bibliographic Details
Published inEuropean economic review Vol. 120; p. 103302
Main Authors Chen, Si, Schildberg-Hörisch, Hannah
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.11.2019
Subjects
Absolute overconfidence
Confidence
Effort provision
Laboratory experiment
Effort provision
Absolute overconfidence
C91
Laboratory experiment
Confidence
D91
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Summary:The motivational value of confidence postulates that individual effort provision is increasing in beliefs on one’s own ability. This relation is supposed to also hold for overconfident individuals who have exaggerated ability beliefs. We present the first empirical evidence on the existence of a motivational value of absolute confidence that many microeconomic models with overconfident agents build on. Moreover, we document that negative debiasing information on individual ability diminishes effort provision – a result that is of obvious relevance for many contexts such as labor relations or learning at school. We also offer a strategy for identifying significant absolute overconfidence at the individual level.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2019.103302