Confidence snowballing and relative performance feedback

Murad, Zahra; Starmer, Chris

Abstract

We investigate whether uninformative relative performance feedback can create biases in confidence leading it to 'snowball'. We study elicited confidence about own performance, relative to other group members, in three stages. As subjects move across stages, we change group composition so that new groups contain either only top performers or only bottom performers, from the previous stage. Between treatments, we manipulate whether subjects know about their own past relative performance or that of currently matched group members. In a treatment where subjects receive no feedback between stages, their confidence remains calibrated and stable across the stages. When subjects receive feedback in the other two treatments, their confidence snowballs in the direction of the feedback, both when feedback is fully informative and completely uninformative of their future performance. The results suggest the possibility of confidence biases emerging and snowballing in a potentially wide range of field settings.

Citation

Murad, Z., & Starmer, C. (2021). Confidence snowballing and relative performance feedback. Journal of Economic Behavior and Organization, 190, 550-572. https://doi.org/10.1016/j.jebo.2021.08.006

• Journal Article Type: Article
• Acceptance Date: Aug 5, 2021
• Online Publication Date: Aug 22, 2021
• Publication Date: 2021-10
• Deposit Date: Aug 12, 2021
• Publicly Available Date: Feb 23, 2023
• Journal: Journal of Economic Behavior and Organization
• Print ISSN: 0167-2681
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 190
• Pages: 550-572
• DOI: https://doi.org/10.1016/j.jebo.2021.08.006
• Keywords: overconfidence; relative performance feedback; confidence updating JEL: C91; D81
• Public URL: https://nottingham-repository.worktribe.com/output/6014608
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0167268121003383?via%3Dihub