How do risk attitudes affect measured confidence?

Murad, Zahra; Sefton, Martin; Starmer, Chris

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.

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

• Journal Article Type: Article
• Acceptance Date: Dec 12, 2015
• Publication Date: Feb 29, 2016
• Deposit Date: Apr 30, 2016
• Publicly Available Date: Apr 30, 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
• DOI: https://doi.org/10.1007/s11166-016-9231-1
• Keywords: Overconfidence; Underconfidence; Experiment; Risk preferences
• Public URL: https://nottingham-repository.worktribe.com/output/774774
• Publisher URL: http://link.springer.com/article/10.1007/s11166-016-9231-1