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Confidence snowballing and relative performance feedback

Murad, Zahra; Starmer, Chris

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Authors

Zahra Murad

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CHRIS STARMER chris.starmer@nottingham.ac.uk
Professor of Experimental Economics



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.

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
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

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