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One-half Heuristic in Overconfidence Research

Author

Listed:
  • VojtÄ›ch Zíka

    (Economic Science Institute, Chapman University and Jan Evangelista PurkynÄ› University)

Abstract

This laboratory experiment (N=120) explored the possibility that overconfdence research concerning overestimation and overplacement may be afected by the one-half heuristic, a tendency of individuals to estimate quantities with unknown distributions at half of the maximum value. The data from multiple rounds of the computerized hand game Rock–Paper–Scissors provide convincing evidence that half of the maximum is the most popular estimate and that manipulating the game’s average score can afect the direction and magnitude of estimation, averaging, and placement levels. The resulting methodological proposal is that the score participants estimate should have an expected value equal to half of the maximum so that the hypothesized efect of the heuristic is accounted for. Additionally, this study introduces confdence levels, a standardized measure of overconfdence, allowing a direct comparison of results across studies.

Suggested Citation

  • VojtÄ›ch Zíka, 2024. "One-half Heuristic in Overconfidence Research," Working Papers 24-08, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:24-08
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/404/
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    More about this item

    Keywords

    overconfdence; one-half heuristic; laboratory experiment; methodology;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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