IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-14-01045.html
   My bibliography  Save this article

Do differing pay schemes help close the gender gap in overconfidence

Author

Listed:
  • Eyal Lahav

    (The College of Management)

  • Arad Nir

    (The College of Management)

  • Erez Siniver

    (The College of Management)

Abstract

We conducted an experiment to compare how overconfidence is influenced by performance-based and fixed payment schemes. Participants in the experiment were students prior to taking a final exam in Introduction to Microeconomics. We find that most participants were overconfident regarding their success on the exam, overestimating the number of questions they would answer correctly. When a fixed pay scheme was used, men were more overconfident than women. Performance-based pay increased the overconfidence of women, and decreased the overconfidence of men. As a result, no gender difference in overconfidence was found when pay is based on performance.

Suggested Citation

  • Eyal Lahav & Arad Nir & Erez Siniver, 2015. "Do differing pay schemes help close the gender gap in overconfidence," Economics Bulletin, AccessEcon, vol. 35(1), pages 30-36.
    • Handle: RePEc:ebl:ecbull:eb-14-01045
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I1-P4.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nekby, Lena & Thoursie, Peter Skogman & Vahtrik, Lars, 2008. "Gender and self-selection into a competitive environment: Are women more overconfident than men?," Economics Letters, Elsevier, vol. 100(3), pages 405-407, September.
    2. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2009. "Large Stakes and Big Mistakes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 451-469.
    3. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    4. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    5. Megan Endres, 2006. "The Effectiveness of Assigned Goals in Complex Financial Decision Making and the Importance of Gender," Theory and Decision, Springer, vol. 61(2), pages 129-157, September.
    6. Brad M. Barber & Terrance Odean, 2001. "Boys will be Boys: Gender, Overconfidence, and Common Stock Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 261-292.
    7. L. Dahlbom & A. Jakobsson & N. Jakobsson & A. Kotsadam, 2011. "Gender and overconfidence: are girls really overconfident?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(4), pages 325-327.
    8. Niklas Jakobsson, 2012. "Gender and confidence: are women underconfident?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(11), pages 1057-1059, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oriana Bandiera & Nidhi Parekh & Barbara Petrongolo & Michelle Rao, 2022. "Men are from Mars, and Women Too: A Bayesian Meta‐analysis of Overconfidence Experiments," Economica, London School of Economics and Political Science, vol. 89(S1), pages 38-70, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:eb-14-00676 is not listed on IDEAS
    2. Hoyer, Britta & van Huizen, Thomas & Keijzer, Linda & Rezaei, Sarah & Rosenkranz, Stephanie & Westbrock, Bastian, 2020. "Gender, competitiveness, and task difficulty: Evidence from the field," Labour Economics, Elsevier, vol. 64(C).
    3. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    4. Macera, Rosario, 2018. "Present or future incentives? On the optimality of fixed wages with moral hazard," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 129-144.
    5. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena 617, Department of Economics, University of Siena.
    6. Brañas-Garza, Pablo & Mesa-Vázquez, Ernesto & Rivero-Garrido, Noelia, 2020. "Gender differences in overplacement in familiar and unfamiliar tasks: Far more similarities," MPRA Paper 104426, University Library of Munich, Germany.
    7. Michael T. Rauh & Giulio Seccia, 2010. "Agency and Anxiety," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(1), pages 87-116, March.
      • Michael T. Rauh & Giulio Seccia, 2006. "Agency and Anxiety," Working Papers 2006-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    8. Klein Teeselink, Bouke & Potter van Loon, Rogier J.D. & van den Assem, Martijn J. & van Dolder, Dennie, 2020. "Incentives, performance and choking in darts," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 38-52.
    9. Cohen-Zada, Danny & Krumer, Alex & Rosenboim, Mosi & Shapir, Offer Moshe, 2017. "Choking under pressure and gender: Evidence from professional tennis," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 176-190.
    10. Cao, Qian & Li, Jianbiao & Niu, Xiaofei, 2019. "The role of overconfidence in overweighting private information: Does gender matter?," EconStor Preprints 203448, ZBW - Leibniz Information Centre for Economics.
    11. Lalin Anik & Lara B Aknin & Michael I Norton & Elizabeth W Dunn & Jordi Quoidbach, 2013. "Prosocial Bonuses Increase Employee Satisfaction and Team Performance," PLOS ONE, Public Library of Science, vol. 8(9), pages 1-8, September.
    12. Pokorny, Kathrin, 2008. "Pay--but do not pay too much: An experimental study on the impact of incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 251-264, May.
    13. Oriana Bandiera & Nidhi Parekh & Barbara Petrongolo & Michelle Rao, 2022. "Men are from Mars, and Women Too: A Bayesian Meta‐analysis of Overconfidence Experiments," Economica, London School of Economics and Political Science, vol. 89(S1), pages 38-70, June.
    14. Pablo A. Celhay & Paul J. Gertler & Paula Giovagnoli & Christel Vermeersch, 2019. "Long-Run Effects of Temporary Incentives on Medical Care Productivity," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 92-127, July.
    15. Rebitzer, James B. & Taylor, Lowell J., 2011. "Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 8, pages 701-772, Elsevier.
    16. Gu, Pu, 2020. "The effects of social bias against female analysts on markets," Journal of Corporate Finance, Elsevier, vol. 64(C).
    17. Andrew E. Clark & David Masclet & Marie Claire Villeval, 2006. "Effort and comparison income: Survey and experimental evidence," Working Papers halshs-00590552, HAL.
    18. Stein, Caroline & Untertrifaller, Anna, 2020. "The effect of ethical responsibility on performance," MPRA Paper 99176, University Library of Munich, Germany.
    19. Carpenter, Jeffrey & Dolifka, David, 2017. "Exploitation aversion: When financial incentives fail to motivate agents," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 213-224.
    20. Eriksson, Tor & Poulsen, Anders & Villeval, Marie Claire, 2009. "Feedback and incentives: Experimental evidence," Labour Economics, Elsevier, vol. 16(6), pages 679-688, December.
    21. Aleksandr Alekseev, 2022. "Give me a challenge or give me a raise," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 170-202, February.

    More about this item

    Keywords

    Overconfidence; gender; bonuses; performance pay; self evaluation;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-14-01045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.