Overconfidence is a robust cognitive bias with far-reaching implications, but prior research on c... more Overconfidence is a robust cognitive bias with far-reaching implications, but prior research on cultural differences in overconfidence has been conflicting. We present two studies that measure the three forms of overconfidence across cultures, allowing us to paint a more complete picture of cross-cultural overconfidence than previous studies. In Study 1, we compare overconfidence among participants from cultures traditionally considered individualistic (the US and UK) with participants from cultures traditionally conceptualized as collectivistic (India and China). In Study 2, we employ a new task to compare overconfidence in participants from the US and India. Our first key result is the successful cross-cultural replication, in both studies, of the effect of task difficulty on overestimation and overplacement, which bolsters our faith that our measures operate similarly across cultures. Our second key finding is that, while we find evidence of higher overestimation in our Indian pa...
This research examines the development of confidence and accuracy over time in the context of for... more This research examines the development of confidence and accuracy over time in the context of forecasting. Although overconfidence has been studied in many contexts, little research examines its progression over long periods of time or in consequential policy domains. This study employs a unique data set from a geopolitical forecasting tournament spanning three years in which thousands of forecasters predicted the outcomes of hundreds of events. We sought to apply insights from research to structure the questions, interactions, and elicitations to improve forecasts. Indeed, forecasters’ confidence roughly matched their accuracy. As information came in, accuracy increased. Confidence increased at approximately the same rate as accuracy, and good calibration persisted. Nevertheless, there was evidence of a small amount of overconfidence (3%), especially on the most confident forecasts. Training helped reduce overconfidence, and team collaboration improved forecast accuracy. Together, ...
Organizational Behavior and Human Decision Processes, 2015
Overprecision is the most robust and least understood form of overconfidence. In an attempt to el... more Overprecision is the most robust and least understood form of overconfidence. In an attempt to elucidate the underlying causes of overprecision in judgment, the present paper offers a new approach-examining people's beliefs about the likelihood of chance events drawn from known probability distributions. This approach allows us to test the assumption that low hit rates inside subjective confidence intervals arise because those confidence intervals are drawn too narrowly. In fact, subjective probability distributions are systematically too wide, or insufficiently precise. This result raises profound questions for the study of overconfidence.
Overprecision is the most robust type of overconfidence. We present a new method that significant... more Overprecision is the most robust type of overconfidence. We present a new method that significantly reduces this bias and offers insight into its underlying cause. In three experiments, overprecision was significantly reduced by forcing participants to consider all possible outcomes of an event. Each participant was presented with the entire range of possible outcomes divided into intervals, and estimated each interval's likelihood of including the true answer. The superiority of this Subjective Probability Interval Estimate (SPIES) method is robust to range widths and interval grain sizes. Its carryover effects are observed even in subsequent estimates made using the conventional, 90% confidence interval method: judges who first made SPIES judgments considered a broader range of values in subsequent conventional interval estimates as well.
Five university-based research groups competed to recruit forecasters, elicit their predictions, ... more Five university-based research groups competed to recruit forecasters, elicit their predictions, and aggregate those predictions to assign the most accurate probabilities to events in a 2-year geopolitical forecasting tournament. Our group tested and found support for three psychological drivers of accuracy: training, teaming, and tracking. Probability training corrected cognitive biases, encouraged forecasters to use reference classes, and provided forecasters with heuristics, such as averaging when multiple estimates were available. Teaming allowed forecasters to share information and discuss the rationales behind their beliefs. Tracking placed the highest performers (top 2% from Year 1) in elite teams that worked together. Results showed that probability training, team collaboration, and tracking improved both calibration and resolution. Forecasting is often viewed as a statistical problem, but forecasts can be improved with behavioral interventions. Training, teaming, and tracki...
Performance (such as a course grade) is a joint function of an individual’s ability (such as inte... more Performance (such as a course grade) is a joint function of an individual’s ability (such as intelligence) and the situation (such as the instructor’s grading leniency). Prior research has documented a human bias toward dispositional inference, which ascribes performance to individual ability, even when it is better explained through situational influences on performance. It is hypothesized here that this tendency leads admissions decisions to favor students coming from institutions with lenient grading because those students have their high grades mistaken for evidence of high ability. Three experiments show that those who obtain high scores simply because of lenient grading are favored in selection. These results have implications for research on attribution because they provide a more stringent test of the correspondence bias and allow for a more precise measure of its size. Implications for university admissions and personnel selection decisions are also discussed.
Negotiation and Conflict Management Research, 2008
Conventional wisdom holds that negotiators who are under time pressure should avoid revealing the... more Conventional wisdom holds that negotiators who are under time pressure should avoid revealing their final deadlines to the other side, especially if they are in a weak position. The present study questions this conventional wisdom. The experiment manipulates time pressure on the negotiators, knowledge of that time pressure, and each side’s power at the bargaining table. Power is manipulated by varying the quality of each side’s alternatives to negotiated agreement (BATNAs). Results show that negotiators benefited from revealing their final deadlines, regardless of the strength of their BATNAs. The discussion explores why this simple lesson is counterintuitive and why negotiators mistakenly believe they ought to keep their deadlines secret.
Organizational Behavior and Human Decision Processes, 2013
The status-enhancement theory of overconfidence proposes that overconfidence pervades self-judgme... more The status-enhancement theory of overconfidence proposes that overconfidence pervades self-judgment because it helps people attain higher social status. Prior work has found that highly confident individuals attained higher status regardless of whether their confidence was justified by actual ability (Anderson, Brion, Moore, & Kennedy, 2012). However, those initial findings were observed in contexts where individuals' actual abilities were unlikely to be discovered by others. What happens to overconfident individuals when others learn how good they truly are at the task? If those individuals are penalized with status demotions, then the status costs might outweigh the status benefits of overconfidence-thereby casting doubt on the benefits of overconfidence. In three studies, we found that group members did not react negatively to individuals revealed as overconfident, and in fact still viewed them positively. Therefore, the status benefits of overconfidence outweighed any possible status costs, lending further support to the status-enhancement theory.
We conduct two experiements of the claim that people are overcon…dent. We develop new tests of ov... more We conduct two experiements of the claim that people are overcon…dent. We develop new tests of overplacement which are based on a formal Bayesian model. Our two experiments, on easy quizzes, …nd overplacement. More precisely, we …nd apparently overcon…dent data that cannot be accounted for by a rational population of expected utility maximizers with a good understanding of the nature of the quizzes they took.
This study will test the calibration of confidence and truth (i.e. under- or overprecision) among... more This study will test the calibration of confidence and truth (i.e. under- or overprecision) among subjects who estimate how many dots there are in images containing between 1 and 1000 dots each.
This paper presents a reconciliation of the three distinct ways in which the research literature ... more This paper presents a reconciliation of the three distinct ways in which the research literature has defined overconfidence: (1) overestimation of one's actual performance, (2) overplacement of one's performance relative to those of others, and (3) overprecision in beliefs about the accuracy of one's knowledge.
Organizational Behavior and Human Decision Processes, 1999
This study examines the portfolio allocation decisions of 80 business students in a computer-base... more This study examines the portfolio allocation decisions of 80 business students in a computer-based investing simulation. Our goal was to better understand why investors spend so much time and money on actively managed mutual funds despite the fact that the vast majority of these funds are outperformed by passively managed index funds. Participants' judgments and decisions provided evidence for a number of biases. First, most participants consistently overestimated both the future performance and the past performance of their investments. Second, participants overestimated the intertemporal consistency of portfolio performance. Third, participants were more likely to shift their portfolio allocation following poorer performance than following better performance, and this tendency had a negative impact on portfolio returns. We speculate that these biases in investor behavior may contribute to suboptimal investment decisions in real financial markets.
Entrepreneurs are often described as overconfident (or at least very confident), even when enteri... more Entrepreneurs are often described as overconfident (or at least very confident), even when entering difficult markets. However, recent laboratory findings suggest that difficult tasks tend to produce underconfidence. How do entrepreneurs maintain confidence in difficult tasks? Our two laboratory experiments and one archival study reconcile the literature by distinguishing types of overconfidence and identifying what type is most prominent in each type of task. Furthermore, we critically examine the notion that 'overconfidence' explains excess market entry: we find that entry into different markets is not driven by confidence in one's own absolute skill, but by confidence in one's skill relative to that of others. Finally, we consider whether overconfidence in relative skill is driven by neglecting competitors or by systematic errors made when considering them.
Research on procedural justice has found that processes that allow people voice (i.e., input) are... more Research on procedural justice has found that processes that allow people voice (i.e., input) are perceived as fairer, and thus elicit more positive reactions, than processes that do not allow people voice. Original theorizing attributed these effects to beliefs that the provision of voice enhances people's sense of process control, which people were assumed to value because it impacts their perceived likelihood of receiving desired outcomes (the instrumental perspective of procedural justice). Subsequent research questioned this perspective, arguing that outcome expectations do not account for the effects of voice. However, this subsequent research failed to directly examine the interplay of voice, outcome expectations, and reactions. The current studies revisit and extend research on this topic by asking whether manipulations of voice act as shared circumstance effects. Confirming an untested implication of the instrumental perspective, we show that giving everyone voice increases their belief, ex-ante, that they are likely to win an upcoming competition. However, this instrumental belief accounts for only part of the effects of voice on perceived procedural fairness and on general reactions to outcomes. Results suggest that voice does indeed have instrumental significance, an implication not adequately recognized in current justice theorizing. However, this instrumentality does not, by itself, explain why people value having a voice in processes that affect them.
Negotiation and Conflict Management Research, 2008
On January 9, 2002, Major League Baseball's owners and players started negotiating for a new coll... more On January 9, 2002, Major League Baseball's owners and players started negotiating for a new collective bargaining agreement for the 2002 season. As the contract talks began, experts estimated the negotiating surplus available for the two sides to divide up at roughly $3.5 billion (Staudohar, 2002). Over the next 8 months, the negotiations remained stuck on the contentious issues of revenue sharing and the so-called ''luxury tax'' on high-payroll teams. On August 16, well into the 2002 season, the executive board of the MLB Players Association (the players' union) set an August 30 strike deadline. On this date, the players strike would begin and the Major League Baseball would stop playing games mid-season. By placing a clear limit on the time remaining to work out a deal, the announcement of the strike stimulated the two sides to come to agreement. It also brought the implications of a strike into sharper focus for the team owners: the cancellation of the rest of the 2002 season, now a real possibility, would have cost them more than a billion dollars (Staudohar, 2002). The strike was avoided with less than two hours to spare. Just 90 min before the August 30 strike deadline, the two parties announced that they had reached agreement. As a result, the 2002 baseball season was played in its entirety.
Journal of Personality and Social Psychology, 2012
In explaining the prevalence of the overconfident belief that one is better than others, prior wo... more In explaining the prevalence of the overconfident belief that one is better than others, prior work has focused on the motive to maintain high self-esteem, abetted by biases in attention, memory, and cognition. An additional possibility is that overconfidence enhances the person's social status. We tested this status-enhancing account of overconfidence in six studies. Studies 1 through 3 found overconfidence leads to higher social status in both short and longer-term groups, using naturalistic and experimental designs. Study 4 applied a Brunswikian (1956) lens analysis and found that overconfidence leads to a behavioral signature that makes the individual appear competent to others. Studies 5 and 6 measured and experimentally manipulated the desire for status and found that the status motive promotes overconfidence. Together, these studies suggest that people might so often believe they are better than others because it helps them achieve higher social status.
Traditional economic and decision-making models allow for "free disposal" of information, which i... more Traditional economic and decision-making models allow for "free disposal" of information, which implies a non-negative value for information. Building on previous research on the "curse of knowledge" we explore situations where this might not be so. In three experiments, we document situations in which participants place positive value on information, even when acquiring that information hurts their performance and earnings. In the first experiment, a majority of participants choose to hire informed-rather than uninformed-agents, leading to lower earnings. In the second experiment, a significant number of participants pay for information-the solution to a puzzle-that hurts their ability to predict how many others will solve the puzzle. In the third experiment, we show that the effect is not eliminated by repetition. We discuss implications of our results for the role of information and informed decision making in economic situations. * Thanks to seminar participants at Carnegie Mellon and Harvard Business School and participants at the 2001 Economic Science Meetings in Tucson and the 2003 meetings of the Society for Judgment and Decision Making in Vancouver for helpful comments and suggestions.
Successful leadership depends on the confidence to rally support, win allies, and deter competito... more Successful leadership depends on the confidence to rally support, win allies, and deter competitors. However, overconfident leaders have led their companies into disaster. This article identifies the circumstances in which leaders are most prone to overconfidence and its concomitant risks. On the flip side, it explores those circumstances under which confidence is most conducive to success. Using insights from recent research, the article provides recommendations on how managers can avoid the pitfalls of overconfidence while benefiting from the advantages of confidence.
EXTENDED ABSTRACT In the 1970s, New York City installed buttons at intersections with traffic lig... more EXTENDED ABSTRACT In the 1970s, New York City installed buttons at intersections with traffic lights. Helpful signs instructed pedestrians: To cross street, push button. Wait for walk signal. Pedestrians in New York routinely assume that pushing the button speeds the ...
Overconfidence is a robust cognitive bias with far-reaching implications, but prior research on c... more Overconfidence is a robust cognitive bias with far-reaching implications, but prior research on cultural differences in overconfidence has been conflicting. We present two studies that measure the three forms of overconfidence across cultures, allowing us to paint a more complete picture of cross-cultural overconfidence than previous studies. In Study 1, we compare overconfidence among participants from cultures traditionally considered individualistic (the US and UK) with participants from cultures traditionally conceptualized as collectivistic (India and China). In Study 2, we employ a new task to compare overconfidence in participants from the US and India. Our first key result is the successful cross-cultural replication, in both studies, of the effect of task difficulty on overestimation and overplacement, which bolsters our faith that our measures operate similarly across cultures. Our second key finding is that, while we find evidence of higher overestimation in our Indian pa...
This research examines the development of confidence and accuracy over time in the context of for... more This research examines the development of confidence and accuracy over time in the context of forecasting. Although overconfidence has been studied in many contexts, little research examines its progression over long periods of time or in consequential policy domains. This study employs a unique data set from a geopolitical forecasting tournament spanning three years in which thousands of forecasters predicted the outcomes of hundreds of events. We sought to apply insights from research to structure the questions, interactions, and elicitations to improve forecasts. Indeed, forecasters’ confidence roughly matched their accuracy. As information came in, accuracy increased. Confidence increased at approximately the same rate as accuracy, and good calibration persisted. Nevertheless, there was evidence of a small amount of overconfidence (3%), especially on the most confident forecasts. Training helped reduce overconfidence, and team collaboration improved forecast accuracy. Together, ...
Organizational Behavior and Human Decision Processes, 2015
Overprecision is the most robust and least understood form of overconfidence. In an attempt to el... more Overprecision is the most robust and least understood form of overconfidence. In an attempt to elucidate the underlying causes of overprecision in judgment, the present paper offers a new approach-examining people's beliefs about the likelihood of chance events drawn from known probability distributions. This approach allows us to test the assumption that low hit rates inside subjective confidence intervals arise because those confidence intervals are drawn too narrowly. In fact, subjective probability distributions are systematically too wide, or insufficiently precise. This result raises profound questions for the study of overconfidence.
Overprecision is the most robust type of overconfidence. We present a new method that significant... more Overprecision is the most robust type of overconfidence. We present a new method that significantly reduces this bias and offers insight into its underlying cause. In three experiments, overprecision was significantly reduced by forcing participants to consider all possible outcomes of an event. Each participant was presented with the entire range of possible outcomes divided into intervals, and estimated each interval's likelihood of including the true answer. The superiority of this Subjective Probability Interval Estimate (SPIES) method is robust to range widths and interval grain sizes. Its carryover effects are observed even in subsequent estimates made using the conventional, 90% confidence interval method: judges who first made SPIES judgments considered a broader range of values in subsequent conventional interval estimates as well.
Five university-based research groups competed to recruit forecasters, elicit their predictions, ... more Five university-based research groups competed to recruit forecasters, elicit their predictions, and aggregate those predictions to assign the most accurate probabilities to events in a 2-year geopolitical forecasting tournament. Our group tested and found support for three psychological drivers of accuracy: training, teaming, and tracking. Probability training corrected cognitive biases, encouraged forecasters to use reference classes, and provided forecasters with heuristics, such as averaging when multiple estimates were available. Teaming allowed forecasters to share information and discuss the rationales behind their beliefs. Tracking placed the highest performers (top 2% from Year 1) in elite teams that worked together. Results showed that probability training, team collaboration, and tracking improved both calibration and resolution. Forecasting is often viewed as a statistical problem, but forecasts can be improved with behavioral interventions. Training, teaming, and tracki...
Performance (such as a course grade) is a joint function of an individual’s ability (such as inte... more Performance (such as a course grade) is a joint function of an individual’s ability (such as intelligence) and the situation (such as the instructor’s grading leniency). Prior research has documented a human bias toward dispositional inference, which ascribes performance to individual ability, even when it is better explained through situational influences on performance. It is hypothesized here that this tendency leads admissions decisions to favor students coming from institutions with lenient grading because those students have their high grades mistaken for evidence of high ability. Three experiments show that those who obtain high scores simply because of lenient grading are favored in selection. These results have implications for research on attribution because they provide a more stringent test of the correspondence bias and allow for a more precise measure of its size. Implications for university admissions and personnel selection decisions are also discussed.
Negotiation and Conflict Management Research, 2008
Conventional wisdom holds that negotiators who are under time pressure should avoid revealing the... more Conventional wisdom holds that negotiators who are under time pressure should avoid revealing their final deadlines to the other side, especially if they are in a weak position. The present study questions this conventional wisdom. The experiment manipulates time pressure on the negotiators, knowledge of that time pressure, and each side’s power at the bargaining table. Power is manipulated by varying the quality of each side’s alternatives to negotiated agreement (BATNAs). Results show that negotiators benefited from revealing their final deadlines, regardless of the strength of their BATNAs. The discussion explores why this simple lesson is counterintuitive and why negotiators mistakenly believe they ought to keep their deadlines secret.
Organizational Behavior and Human Decision Processes, 2013
The status-enhancement theory of overconfidence proposes that overconfidence pervades self-judgme... more The status-enhancement theory of overconfidence proposes that overconfidence pervades self-judgment because it helps people attain higher social status. Prior work has found that highly confident individuals attained higher status regardless of whether their confidence was justified by actual ability (Anderson, Brion, Moore, & Kennedy, 2012). However, those initial findings were observed in contexts where individuals' actual abilities were unlikely to be discovered by others. What happens to overconfident individuals when others learn how good they truly are at the task? If those individuals are penalized with status demotions, then the status costs might outweigh the status benefits of overconfidence-thereby casting doubt on the benefits of overconfidence. In three studies, we found that group members did not react negatively to individuals revealed as overconfident, and in fact still viewed them positively. Therefore, the status benefits of overconfidence outweighed any possible status costs, lending further support to the status-enhancement theory.
We conduct two experiements of the claim that people are overcon…dent. We develop new tests of ov... more We conduct two experiements of the claim that people are overcon…dent. We develop new tests of overplacement which are based on a formal Bayesian model. Our two experiments, on easy quizzes, …nd overplacement. More precisely, we …nd apparently overcon…dent data that cannot be accounted for by a rational population of expected utility maximizers with a good understanding of the nature of the quizzes they took.
This study will test the calibration of confidence and truth (i.e. under- or overprecision) among... more This study will test the calibration of confidence and truth (i.e. under- or overprecision) among subjects who estimate how many dots there are in images containing between 1 and 1000 dots each.
This paper presents a reconciliation of the three distinct ways in which the research literature ... more This paper presents a reconciliation of the three distinct ways in which the research literature has defined overconfidence: (1) overestimation of one's actual performance, (2) overplacement of one's performance relative to those of others, and (3) overprecision in beliefs about the accuracy of one's knowledge.
Organizational Behavior and Human Decision Processes, 1999
This study examines the portfolio allocation decisions of 80 business students in a computer-base... more This study examines the portfolio allocation decisions of 80 business students in a computer-based investing simulation. Our goal was to better understand why investors spend so much time and money on actively managed mutual funds despite the fact that the vast majority of these funds are outperformed by passively managed index funds. Participants' judgments and decisions provided evidence for a number of biases. First, most participants consistently overestimated both the future performance and the past performance of their investments. Second, participants overestimated the intertemporal consistency of portfolio performance. Third, participants were more likely to shift their portfolio allocation following poorer performance than following better performance, and this tendency had a negative impact on portfolio returns. We speculate that these biases in investor behavior may contribute to suboptimal investment decisions in real financial markets.
Entrepreneurs are often described as overconfident (or at least very confident), even when enteri... more Entrepreneurs are often described as overconfident (or at least very confident), even when entering difficult markets. However, recent laboratory findings suggest that difficult tasks tend to produce underconfidence. How do entrepreneurs maintain confidence in difficult tasks? Our two laboratory experiments and one archival study reconcile the literature by distinguishing types of overconfidence and identifying what type is most prominent in each type of task. Furthermore, we critically examine the notion that 'overconfidence' explains excess market entry: we find that entry into different markets is not driven by confidence in one's own absolute skill, but by confidence in one's skill relative to that of others. Finally, we consider whether overconfidence in relative skill is driven by neglecting competitors or by systematic errors made when considering them.
Research on procedural justice has found that processes that allow people voice (i.e., input) are... more Research on procedural justice has found that processes that allow people voice (i.e., input) are perceived as fairer, and thus elicit more positive reactions, than processes that do not allow people voice. Original theorizing attributed these effects to beliefs that the provision of voice enhances people's sense of process control, which people were assumed to value because it impacts their perceived likelihood of receiving desired outcomes (the instrumental perspective of procedural justice). Subsequent research questioned this perspective, arguing that outcome expectations do not account for the effects of voice. However, this subsequent research failed to directly examine the interplay of voice, outcome expectations, and reactions. The current studies revisit and extend research on this topic by asking whether manipulations of voice act as shared circumstance effects. Confirming an untested implication of the instrumental perspective, we show that giving everyone voice increases their belief, ex-ante, that they are likely to win an upcoming competition. However, this instrumental belief accounts for only part of the effects of voice on perceived procedural fairness and on general reactions to outcomes. Results suggest that voice does indeed have instrumental significance, an implication not adequately recognized in current justice theorizing. However, this instrumentality does not, by itself, explain why people value having a voice in processes that affect them.
Negotiation and Conflict Management Research, 2008
On January 9, 2002, Major League Baseball's owners and players started negotiating for a new coll... more On January 9, 2002, Major League Baseball's owners and players started negotiating for a new collective bargaining agreement for the 2002 season. As the contract talks began, experts estimated the negotiating surplus available for the two sides to divide up at roughly $3.5 billion (Staudohar, 2002). Over the next 8 months, the negotiations remained stuck on the contentious issues of revenue sharing and the so-called ''luxury tax'' on high-payroll teams. On August 16, well into the 2002 season, the executive board of the MLB Players Association (the players' union) set an August 30 strike deadline. On this date, the players strike would begin and the Major League Baseball would stop playing games mid-season. By placing a clear limit on the time remaining to work out a deal, the announcement of the strike stimulated the two sides to come to agreement. It also brought the implications of a strike into sharper focus for the team owners: the cancellation of the rest of the 2002 season, now a real possibility, would have cost them more than a billion dollars (Staudohar, 2002). The strike was avoided with less than two hours to spare. Just 90 min before the August 30 strike deadline, the two parties announced that they had reached agreement. As a result, the 2002 baseball season was played in its entirety.
Journal of Personality and Social Psychology, 2012
In explaining the prevalence of the overconfident belief that one is better than others, prior wo... more In explaining the prevalence of the overconfident belief that one is better than others, prior work has focused on the motive to maintain high self-esteem, abetted by biases in attention, memory, and cognition. An additional possibility is that overconfidence enhances the person's social status. We tested this status-enhancing account of overconfidence in six studies. Studies 1 through 3 found overconfidence leads to higher social status in both short and longer-term groups, using naturalistic and experimental designs. Study 4 applied a Brunswikian (1956) lens analysis and found that overconfidence leads to a behavioral signature that makes the individual appear competent to others. Studies 5 and 6 measured and experimentally manipulated the desire for status and found that the status motive promotes overconfidence. Together, these studies suggest that people might so often believe they are better than others because it helps them achieve higher social status.
Traditional economic and decision-making models allow for "free disposal" of information, which i... more Traditional economic and decision-making models allow for "free disposal" of information, which implies a non-negative value for information. Building on previous research on the "curse of knowledge" we explore situations where this might not be so. In three experiments, we document situations in which participants place positive value on information, even when acquiring that information hurts their performance and earnings. In the first experiment, a majority of participants choose to hire informed-rather than uninformed-agents, leading to lower earnings. In the second experiment, a significant number of participants pay for information-the solution to a puzzle-that hurts their ability to predict how many others will solve the puzzle. In the third experiment, we show that the effect is not eliminated by repetition. We discuss implications of our results for the role of information and informed decision making in economic situations. * Thanks to seminar participants at Carnegie Mellon and Harvard Business School and participants at the 2001 Economic Science Meetings in Tucson and the 2003 meetings of the Society for Judgment and Decision Making in Vancouver for helpful comments and suggestions.
Successful leadership depends on the confidence to rally support, win allies, and deter competito... more Successful leadership depends on the confidence to rally support, win allies, and deter competitors. However, overconfident leaders have led their companies into disaster. This article identifies the circumstances in which leaders are most prone to overconfidence and its concomitant risks. On the flip side, it explores those circumstances under which confidence is most conducive to success. Using insights from recent research, the article provides recommendations on how managers can avoid the pitfalls of overconfidence while benefiting from the advantages of confidence.
EXTENDED ABSTRACT In the 1970s, New York City installed buttons at intersections with traffic lig... more EXTENDED ABSTRACT In the 1970s, New York City installed buttons at intersections with traffic lights. Helpful signs instructed pedestrians: To cross street, push button. Wait for walk signal. Pedestrians in New York routinely assume that pushing the button speeds the ...
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Papers by Don Moore