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On the Positive Effects of Overcon fident Self-Perception in Teams

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  • Ludwig, Sandra
  • Wichardt, Philip C.
  • Wickhorst, Hanke

Abstract

In this paper, we study the individual payoff effects of overconfident self-perception in teams. In particular, we demonstrate that the welfare of an overconfident agent in a team of one rational and one overconfident agent or a team of two overconfident agents can be higher than that of the members of a team of two rational agents. This result holds irrespective of the assumption about the agents' awareness of their colleague's bias. Moreover, we show that an overcondent agent is always better of when he is unaware of a potential bias of his colleague.

Suggested Citation

  • Ludwig, Sandra & Wichardt, Philip C. & Wickhorst, Hanke, 2011. "On the Positive Effects of Overcon fident Self-Perception in Teams," Discussion Papers in Economics 12246, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:12246
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    File URL: https://epub.ub.uni-muenchen.de/12246/1/Ludwig_Wichardt_Wickhorst_2011_mimeo_On_the_Positive_Effects_of_Overconfident_Self-Perception.pdf
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    References listed on IDEAS

    as
    1. Luís Santos-Pinto, 2008. "Positive Self-image and Incentives in Organisations," Economic Journal, Royal Economic Society, vol. 118(531), pages 1315-1332, August.
    2. de la Rosa, Leonidas Enrique, 2011. "Overconfidence and moral hazard," Games and Economic Behavior, Elsevier, vol. 73(2), pages 429-451.
    3. Francesco Squintani, 2006. "Mistaken self-perception and equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(3), pages 615-641, April.
    4. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
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    Cited by:

    1. Geyer, Hannah & Wickhorst, Hanke, 2011. "Overconfidence and team-performance: An analysis of NBA-players' self-perception," CIW Discussion Papers 4/2011, University of Münster, Center for Interdisciplinary Economics (CIW).
    2. Chen, Si & Schildberg-Hörisch, Hannah, 2019. "Looking at the bright side: The motivational value of confidence," European Economic Review, Elsevier, vol. 120(C).
    3. Brookins, Philip & Lucas, Adriana & Ryvkin, Dmitry, 2014. "Reducing within-group overconfidence through group identity and between-group confidence judgments," Journal of Economic Psychology, Elsevier, vol. 44(C), pages 1-12.

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    More about this item

    Keywords

    Overconfidence; Team Production;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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