Browsing by Subject "Overconfidence"

Now showing 1 - 3 of 3

Open Access
Confidence enhanced performance : does it exist and if so how does it work?
(2010) Murad, Zahra
We empirically test and investigate the psychological mechanism behind the theory of Confidence Enhanced Performance (Compte and Postlewaite, 2004). This theory suggests that if confidence enhances performance, then people will benefit from having the commonly observed tendency to discount past failures and be overconfident. We test this hypothesis using three tasks which require different cognitive abilities. Our findings are partially supportive of the theory. However, we cannot conclude that any of our confidence variables significantly and positively affect performance. Only in one task (the Picture Recall task) we find that enhanced mood level positively affects performance. The view that people are generally overconfident when performing tasks with imperfect feedback is not upheld. Furthermore, there seem to be strong task differences in both levels of confidence and the effects of psychological variables on performance.
Open Access
The effects of feedback on judgmental interval predictions
(Elsevier, 2004) Bolger, F.; Önkal-Atay, D.
The majority of studies of probability judgment have found that judgments tend to be overconfident and that the degree of overconfidence is greater the more difficult the task. Further, these effects have been resistant to attempts to ‘debias’ via feedback. We propose that under favourable conditions, provision of appropriate feedback should lead to significant improvements in calibration, and the current study aims to demonstrate this effect. To this end, participants first specified ranges within which the true values of time series would fall with a given probability. After receiving feedback, forecasters constructed intervals for new series, changing their probability values if desired. The series varied systematically in terms of their characteristics including amount of noise, presentation scale, and existence of trend. Results show that forecasts were initially overconfident but improved significantly after feedback. Further, this improvement was not simply due to ‘hedging’, i.e. shifting to very high probability estimates and extremely wide intervals; rather, it seems that calibration improvement was chiefly obtained by forecasters learning to evaluate the extent of the noise in the series. D 2003 International Institute of Forecasters. Published by Elsevier B.V. All rights reserved.
Open Access
Market entry decisions: effects of absolute and relative confidence
(Hogrefe Publishing, 2008) Bolger, F.; Pulford, B. D.; Colman, A. M.
In a market entry game, the number of entrants usually approaches game-theoretic equilibrium quickly, but in real-world markets business start-ups typically exceed market capacity, resulting in chronically high failure rates and suboptimal industry profits. Excessive entry has been attributed to overconfidence arising when expected payoffs depend partly on skill. In an experimental test of this hypothesis, 96 participants played 24 rounds of a market entry game, with expected payoffs dependent partly on skill on half the rounds, after their confidence was manipulated and measured. The results provide direct support for the hypothesis that high levels of confidence are largely responsible for excessive entry, and they suggest that absolute confidence, independent of interpersonal comparison, rather than confidence about one's abilities relative to others, drives excessive entry decisions when skill is involved.