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Cheap talk and credibility: The consequences of confidence and accuracy on advisor credibility and persuasiveness

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  • Sah, Sunita
  • Moore, Don A.
  • MacCoun, Robert J.

Abstract

Is it possible to increase one’s influence simply by behaving more confidently? Prior research presents two competing hypotheses: (1) the confidence heuristic holds that more confidence increases credibility, and (2) the calibration hypothesis asserts that overconfidence will backfire when others find out. Study 1 reveals that, consistent with the calibration hypothesis, while accurate advisors benefit from displaying confidence, confident but inaccurate advisors receive low credibility ratings. However, Study 2 shows that when feedback on advisor accuracy is unavailable or costly, confident advisors hold sway regardless of accuracy. People also made less effort to determine the accuracy of confident advisors; interest in buying advisor performance data decreased as the advisor’s confidence went up. These results add to our understanding of how advisor confidence, accuracy, and calibration influence others.

Suggested Citation

  • Sah, Sunita & Moore, Don A. & MacCoun, Robert J., 2013. "Cheap talk and credibility: The consequences of confidence and accuracy on advisor credibility and persuasiveness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 121(2), pages 246-255.
    • Handle: RePEc:eee:jobhdp:v:121:y:2013:i:2:p:246-255
    DOI: 10.1016/j.obhdp.2013.02.001
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    Cited by:

    1. Aghazadeh, Sanaz & Hoang, Kris, 2020. "How does audit firm emphasis on client relationship quality influence auditors’ inferences about and responses to potential persuasion in client communications?," Accounting, Organizations and Society, Elsevier, vol. 87(C).
    2. Leiby, Justin, 2018. "The role of consultants and management prestige in management control system adoption," Accounting, Organizations and Society, Elsevier, vol. 66(C), pages 1-13.
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      • Fotios Petropoulos & Daniele Apiletti & Vassilios Assimakopoulos & Mohamed Zied Babai & Devon K. Barrow & Souhaib Ben Taieb & Christoph Bergmeir & Ricardo J. Bessa & Jakub Bijak & John E. Boylan & Jet, 2020. "Forecasting: theory and practice," Papers 2012.03854, arXiv.org, revised Jan 2022.
    4. Aghazadeh, Sanaz & Joe, Jennifer R., 2022. "Auditors' response to management confidence and misstatement risk," Accounting, Organizations and Society, Elsevier, vol. 101(C).
    5. Jack B. Soll & Asa B. Palley & Christina A. Rader, 2022. "The Bad Thing About Good Advice: Understanding When and How Advice Exacerbates Overconfidence," Management Science, INFORMS, vol. 68(4), pages 2949-2969, April.
    6. repec:cup:judgdm:v:12:y:2017:i:1:p:29-41 is not listed on IDEAS
    7. Rastislav Rehak, 2022. "Sequential Sampling Beyond Decisions? A Normative Model of Decision Confidence," CERGE-EI Working Papers wp739, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    8. Mesbah, Neda & Tauchert, Christoph & Buxmann, Peter, 2021. "Whose Advice Counts More – Man or Machine? An Experimental Investigation of AI-based Advice Utilization," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 124796, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    9. Laurent Vilanova & Nadège Marchand & Walid Hichri, 2015. "Financing and advising with (over)confident entrepreneurs: an experimental investigation," Working Papers halshs-01154514, HAL.
    10. Sah, Sunita, 2019. "Understanding the (perverse) effects of disclosing conflicts of interest: A direct replication study," Journal of Economic Psychology, Elsevier, vol. 75(PA).
    11. Blunden, Hayley & Logg, Jennifer M. & Brooks, Alison Wood & John, Leslie K. & Gino, Francesca, 2019. "Seeker beware: The interpersonal costs of ignoring advice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 150(C), pages 83-100.
    12. Bolger, Fergus & Rowe, Gene & Belton, Ian & Crawford, Megan M & Hamlin, Iain & Sissons, Aileen & Taylor Browne Lūka, Courtney & Vasilichi, Alexandrina & Wright, George, 2020. "The Simulated Group Response Paradigm: A new approach to the study of opinion change in Delphi and other structured-group techniques," OSF Preprints 4ufzg, Center for Open Science.
    13. Kausel, Edgar E. & Culbertson, Satoris S. & Madrid, Hector P., 2016. "Overconfidence in personnel selection: When and why unstructured interview information can hurt hiring decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 137(C), pages 27-44.
    14. Sah, Sunita & Loewenstein, George, 2015. "Conflicted advice and second opinions: Benefits, but unintended consequences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 130(C), pages 89-107.
    15. Önkal, Dilek & Sinan Gönül, M. & Goodwin, Paul & Thomson, Mary & Öz, Esra, 2017. "Evaluating expert advice in forecasting: Users’ reactions to presumed vs. experienced credibility," International Journal of Forecasting, Elsevier, vol. 33(1), pages 280-297.
    16. Hoffmann, Robert & Chesney, Thomas & Chuah, Swee-Hoon & Kock, Florian & Larner, Jeremy, 2020. "Demonstrability, difficulty and persuasion: An experimental study of advice taking," Journal of Economic Psychology, Elsevier, vol. 76(C).
    17. Haran, Uriel & Mazar, Asaf & Hurwitz, Mordechai & Moran, Simone, 2022. "Confidently at your service: Advisors alter their stated confidence to be helpful," Organizational Behavior and Human Decision Processes, Elsevier, vol. 171(C).
    18. Georgina Gous & Jacqueline M. Wheatcroft, 2020. "Directive Leading Questions and Preparation Technique Effects on Witness Accuracy," SAGE Open, , vol. 10(1), pages 21582440198, January.
    19. Kennedy, Jessica A. & Anderson, Cameron & Moore, Don A., 2013. "When overconfidence is revealed to others: Testing the status-enhancement theory of overconfidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 122(2), pages 266-279.
    20. Jeremy Burke & Angela A. Hung & Jack Clift & Steven Garber & Joanne K. Yoong, 2015. "Impacts of Conflicts of Interest in the Financial Services Industry," Working Papers WR-1076, RAND Corporation.
    21. Eyal Carmel & Dana Carmel & David Leiser & Avia Spivak, 2015. "Facing a Biased Adviser While Choosing a Retirement Plan: The Impact of Financial Literacy and Fair Disclosure," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(3), pages 576-595, November.
    22. Chen Li & Ning Liu, 2021. "What to tell? Wise communication and wise crowd," Theory and Decision, Springer, vol. 90(2), pages 279-299, March.
    23. Julia P. Prims & Don A. Moore, 2017. "Overconfidence over the lifespan," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(1), pages 29-41, January.

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