Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Sep, 2011, Volume 79, Issue 5

Apparent Overconfidence
p. 1591-1625

Jean‐Pierre Benoît, Juan Dubra

It is common for a majority of people to rank themselves as better than average on simple tasks and worse than average on difficult tasks. The literature takes for granted that this apparent misconfidence is problematic. We argue, however, that this behavior is consistent with purely rational Bayesian updaters. In fact, better‐than‐average data alone cannot be used to show overconfidence; we indicate which type of data can be used. Our theory is consistent with empirical patterns found in the literature.

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