Camerer, C., & Lovallo, D. (1999). “Overconfidence and Excess Entry: An Experimental Approach.” American Economic Review, 89(1), 306–318. Retrieved from
The authors studied the decisions of MBA students to enter a competitive environment in which their chances of success depended on their actual rank in a sports trivia quiz. A large majority of the students overestimated their rank, causing them to enter the competition even when they had very low chances of earning a positive profit. The findings are consistent with the prediction that overconfidence leads to excessive business entry.
Barber, Brad M. and Terrance Odean. “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment” The Quarterly Journal of Economics, February 2001: 261-292.
Barber and Oden test the idea that men are more overconfident than women using data on financial decisions from 35,000 brokerage accounts. Focusing on common-stock investments, they found that men traded 45 percent more than women. Rather than increasing men’s returns (as it would if men’s more frequent trading was driven by access to better information), this additional trading reducesmen’s net returns by 2.65 percentage points a year. Thus, the stock market appears to be an environment where men’s greater overconfidence actually harms them financially.
Niederle, Muriel, and Lise Vesterlund, (2007). "Do women shy away from competition? Do men compete too much?" Quarterly Journal of Economics 122(3): 1067-1101.
Participants in a laboratory experiment solve a real task, first under a noncompetitive piece rate and then a competitive tournament incentive scheme. Although there are no gender differences in performance, men select the tournament twice as much as women when choosing their compensation scheme. The authors attribute this difference to a combination of gender differences in overconfidence, and gender differences in tastes for competition.
Victor Lavy, 2013. "Gender Differences in Market Competitiveness in a Real Workplace: Evidence from Performance‐based Pay Tournaments among Teachers," Economic Journal, vol. 123(569), pages 540-573
In a rank order tournament among math, English and Language teachers, the average ranking, winning rate and awarded prize did not differ by gender nor between teachers in competition groups with only female teachers or with both genders.
Flory,Jeffrey A., Andreas, Leibbrandt and John A. List, (2014). “Do Competitive Workplaces Deter Female Workers? A Large-Scale Natural Field Experiment on Job Entry Decisions, “Review of Economic Studies, 82(1):122-155.
Examines whether a competitive compensation regime, by itself, can cause differential job entry, by varying the role that individual competition plays in setting the wage and the gender composition. The data highlights the power of the compensation regime in that women disproportionately shy away from competitive work settings.
Bordalo, Pedro., Katherine B. Coffman, Nicola Gennaioliand Andrei Shleifer, (2016). “Beliefs about Gender,” NBER working paper 22972.
Develops a theoretical model and applies it to analyze a large laboratory dataset in which participants estimate their own and a partner’s performance on questions across six subjects. Findings suggest that gender stereotypes have strong predictive power for beliefs, particularly for men’s beliefs about themselves and others’ beliefs about the ability of men.
Exley, Christine L., Muriel Niederle and Lise Vesterlund, (2016). “Knowing When to Ask: The Cost of Leaning In,” NBER working paper number 22961.
Examines the effect of leaning-in using a laboratory experiment. Despite men and women achieving similar and positive returns when they must negotiate, results suggest that women avoid negotiations more often than men.
Eriksson, Tor., Nina Smith and Valdemar Smith, (2017). “Gender Stereotyping and Self-Stereotyping Attitudes: A Large Field Study of Managers,” IZA Discussion paper number 10932.
Examines gender stereotypes and self-stereotyping in a large cross section of (about 2,970) managers at different job levels in (1,875) Danish private-sector firms.
Bandiera, Oriana, Nidhi Parekh, Barbara Petrongolo, and Michelle Rao 2021 Men Are from Mars, and Women Too: A Bayesian Meta-Analysis of Overconfidence Experiments. IZA discussion paper no. 14950
Gender differences in self-confidence have been proposed to explain gender differences in entry into competitions, and in representation in high-income occupations. Combining data from a large number of over-confidence experiments, the authors the authors find, however, that both men and women are typically overconfident. Also, combining evidence from all the studies, the authors cannot statistically reject the hypothesis that there is no gender gap in self-confidence.
Exley, Christine L., and Judd B. Kessler 2022 The Gender Gap in Self-Promotion Quarterly Journal of Economics, 117(3): 1345–1381.
In a series of experiments involving over 4,000 online participants and over 10,000 school-aged youth, girls subjectively describe their performance on math-and-science type task as worse than boys. This gender gap in self-evaluations persists with age and arises as early as the sixth grade. No gender gap arises if individuals are asked about their performance on a more female-typed task.
Huffman, David, Collin Raymond and Julia Shvets 2022 Persistent Overconfidence and Biased Memory: Evidence from Managers Persistent Overconfidence and Biased Memory: Evidence from Managers American Economic Review 112(10): 3141–3175
A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods the authors find that (i) managers make overconfident predictions about future performance; (ii) managers have overly positive memories of past performance; (iii) these two phenomena are linked at an individual level. These results are consistent with models of motivated beliefs in which individuals are motivated to distort memories of feedback and preserve unrealistic expectations.
Dohmen, Thomas, Ingrid M.T. Rohde, and Tom Stolp 2023. Tournament Incentives Affect Perceived Stress and Hormonal Stress Responses IZA DP No. 16025
The authors conduct a laboratory experiment among male participants to investigate whether tournament incentives induce more stress than a fixed payment scheme. Stress is measured over the entire course of the experiment at both the hormonal and psychological level. They find that tournament incentives induce a stress response whereas a fixed payment does not induce stress. However, neither perceived psychological stress nor elevated cortisol levels in a previous tournament predict a subsequent choice between tournaments and fixed payment schemes, indicating that stress induced by incentives schemes is not a relevant criterion for sorting decisions in our experiment.
De Sousa, José and Guillaume Hollard 2023. From Micro to Macro Gender Differences: Evidence from Field Tournaments Management Science, Vol. 69, No. 6: 3358-3399.
In chess tournaments, women compete worse against men in field tournaments in over 150 countries and across all ages. They find a ‘macro’ gender gap in every country: there are fewer female than male players, especially at the top, and women have lower average rankings. Comparing millions of individual games, they also find a small but robust ‘micro’ gender gap: women’s scores are about 2% lower than expected when playing a man rather than a woman with an identical rating, age and country. Using a simple theoretical model, they show how this small micro gap may affect women’s long-run human-capital formation. By reducing effort and increasing the probability of quitting, both effects accumulate to explain a larger share of the macro gap.
Benoît, Jean-Pierre, Juan Dubra and Don Moore, (2014). “Does the Better-Than-Average Effect Show That People Are Overconfident?: Two Experiments,” Journal of the European Economic Association, 13(2):293-329.
Conducts two experimental tests of the claim that people are overconfident, using new tests of overplacement that are based on a formal Bayesian model. Finds that apparently overconfident data that cannot be accounted for by a rational population of expected utility maximizers who care only about money.
Chen Si and Hannah Schildberg-Hörisch, (2018). “Looking at the Bright Side: The Motivation Value of Overconfidence,” IZA, Discussion Paper No. 11564.
Presents the first empirical evidence on the existence of a motivation value of absolute overconfidence that many microeconomic models build on. Documents that debiasing information increases the accuracy of productivity beliefs of overconfident individuals but comes at the cost of diminished effort provision – a result that is of obvious relevance for many contexts such as labor relations or learning at school.
Huffman, David., Collin Raymond, and Julia Shvets, (2018). "Persistent Overconfidence and Biased Memory: Evidence from Managers".
Studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Reduced form and structural methods show that: (i) managers make overconfident predictions about future performance; (ii) managers have overly-positive memories of past performance; (iii) the two phenomena are linked at an individual level.
Alan, Sule and Seda Ertac. Mitigating the Gender Gap in the Willingness to Compete: Evidence From a Randomized Field Experiment. Journal of the European Economic Association, Volume 17, Issue 4, August 2019, Pages 1147–1185.
Using a randomized experiment, the authors demonstrate that an educational intervention in primary schools can eliminate the gender gap in the willingness to compete. The authors’ intervention aims to foster grit, a skill that is highly predictive of achievement. The intervention promotes grit by exposing children to a worldview that emphasizes the role of effort in achievement and that encourages perseverance.
Bertoni, Marco, Giorgio Brunello, Daniele Checchi, Lorenzo Rocco 2020. Where Do I Stand? Assessing Researchers' Beliefs about Their Relative Productivity IZA discussion paper No. 13637
While the incentive to enter a competition depends on a person’s relative ability, people are not always the best judge of that. Using data on a research grant competition, these authors found that low-productivity researchers over-estimated their own position in the productivity distribution, while high-productivity researchers did the opposite.
Laferrière, Vincent, David Staubli, and Christian Thöni 2022 Explaining Excess Entry in Winner-Take-All Markets. Management Science, Vol. 69, No. 2: 1050-1069.
The authors report experimental data from standard market entry games and winner-take-all games. At odds with traditional decision-making models with risk aversion, the winner-take-all condition results in substantially more entry than the expected-payoff-equivalent market entry game. They explore three candidate explanations for excess entry: blind spot, illusion of control, and joy of winning, none of which receive empirical support. Instead, the authors argue that excess entry into highly competitive environments is not caused by a preference for competition, but by probability weighting: Market entrants overweight the small probabilities associated with the high payoff outcomes in winner-take-all markets, while they underweight probable failures.