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How do risk attitudes affect measured confidence?

Murad, Zahra; Sefton, Martin; Starmer, Chris

Authors

Zahra Murad

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



Abstract

We examine the relationship between confidence in own absolute performance and risk attitudes using two confidence elicitation procedures: self-reported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the “hard-easy effect” (underconfidence in easy tasks and overconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is significantly reduced, but not eliminated when we filter out the effects of risk attitudes. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting.

Journal Article Type Article
Publication Date Feb 29, 2016
Journal Journal of Risk and Uncertainty
Print ISSN 0895-5646
Electronic ISSN 1573-0476
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 52
Issue 1
APA6 Citation Murad, Z., Sefton, M., & Starmer, C. (2016). How do risk attitudes affect measured confidence?. Journal of Risk and Uncertainty, 52(1), https://doi.org/10.1007/s11166-016-9231-1
DOI https://doi.org/10.1007/s11166-016-9231-1
Keywords Overconfidence; Underconfidence; Experiment; Risk preferences
Publisher URL http://link.springer.com/article/10.1007/s11166-016-9231-1
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0





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