Playing the trump card:Why we select overconfident leaders and why it matters

Five studies test the relationship between overconfidence and perceived leadership suitability. Study 1, a field study wherein HR consultants assessed candidates for an advertised leadership position, finds that overconfidence positively predicts hiring recommendations. Study 2, in which participants delivered a five-minute job talk to an expert panel, finds that overconfidence buffers social stress, thereby improving participants' job pitches. Study 3, which tested the effect of confidence on leadership selection at different levels of manipulated competence, finds that regardless of competence, confidence increases perceived leadership potential. Study 4, finds that within the context of the 2016 US Primaries, voters were swayed by candidates' confidence, regardless of candidate competence. Study 5, an agent-based simulation, demonstrates that if candidates adjust to voter preferences for confidence, competent candidates become less likely to be elected. These findings suggest that overconfidence manifests behavioral displays that activate people's implicit leadership theories, thereby increasing perceptions of leadership potential

Self-assessment of knowledge in Higher Education

An appreciation of the extent of one’s knowledge has been referred to as metaknowledge and if well developed, this can help students to develop effective learning strategies. Accurate self-assessment can highlight gaps in knowledge and prompt initiatives to address these deficiencies. However previous studies suggest that metaknowledge tends to be poorly developed and the most common finding is that individuals tend to display overconfidence in their knowledge, by overestimating how much they know. This research addresses learning in a higher education environment and focuses specifically on students studying at a large UK business school. It aims to determine their ability to appreciate the extent of their knowledge in the context of their learning programme and to explore the relationship between this ability and academic performance. The study takes a quantitative approach, employing a research instrument incorporating a multiple choice test related to the participants’ study programme and an accompanying questionnaire. Having completed data collection, the next stage in the research is to analyse this data to determine whether and the extent to which, respondents display overconfidence in their assessment of their own knowledge. Individual differences in respect of age, gender and nationality will also be explored as well as the association between the ability to accurately self assess knowledgeand academic performance

Illusion of Expertise in Portfolio Decisions - An Experimental Approach

Overall, 72 subjects invest their endowment in four risky assets. Each com-bination of assets yields the same expected return and variance of returns. Illusion of expertise prevails when one prefers nevertheless the self-selected portfolio. After being randomly assigned to groups of four subjects are asked to elect their "expert" based on responses to a prior decision task. Using the random price mecha-nism reveals that 64% of the subjects prefer their own portfolio over the average group portfolio or the expert’s port-folio. Illusion of expertise is shown to be stable individually, over alternatives, and for both eliciting methods, willingness to pay and to accept.investment decisions, portfolio selection, overconfidence, unrealistic optimism, illusion of control, endowment effect

Effectual Entrepreneurship: Book Review

This review offers an overview of the new textbook, titled “Effectual Entrepreneurship” (2011, Routledge), by Read, Sarasvathy, Dew, Wiltbank, and Ohlsson (hereafter RSDWO). The book addresses large audiences of students, scholars, latent and current entrepreneurs, offering a new insight on the study and practice of entrepreneurship. This is achieved via the overview and critical evaluation of the stylized facts of the entrepreneurship literature, and the provision of the principles of effectual entrepreneurship for startups, growing ventures and social enterprises. This synthesis is presented in a unique non‐technical way that makes the book a valuable handbook for individuals from all backgrounds with an interest in entrepreneurship as a discipline or as practice. The authors envisage the role of entrepreneurial education based on the view that entrepreneurship is not necessarily innate, and this is exactly what they achieve: the production of a remarkable entrepreneurship education tool

Aging and decision making: a comparison between neurologically healthy elderly and young individuals

We report the results of experiments on economic decisions with two populations, one of healthy elderly individuals (average age 82) and one of younger students (average age 20). We examine confidence, decisions under uncertainty, differences between willingness to pay and willingness to accept and the theory of mind (strategic thinking). Our findings indicate that the older adults’ decision behavior is similar to that of young adults, contrary to the notion that economic decision making is impaired with age. Moreover, some of the demonstrated decision behaviors suggest that the elderly individuals are less biased than the younger individuals

Scientific Method, Anti-Foundationalism, and Public Decision-making

An examination of the legitimacy of attacks on lay assessments of environmental or other technological Risk. The case is made that rational policy requires an epistemology in which what we believe about Risk is bootstrapped onto how we should act concerning Risk

On the Positive Effects of Overcon fident Self-Perception in Teams

In this paper, we study the individual payoff effects of overconfident self-perception in teams. In particular, we demonstrate that the welfare of an overconfident agent in a team of one rational and one overconfident agent or a team of two overconfident agents can be higher than that of the members of a team of two rational agents. This result holds irrespective of the assumption about the agents' awareness of their colleague's bias. Moreover, we show that an overcondent agent is always better of when he is unaware of a potential bias of his colleague

Excess entry, ambiguity seeking and competence: An experimental investigation

Excess entry refers to the high failure rate of new entrepreneurial ventures. Economic explanations suggest 'hit and run' entrants and risk-seeking behavior. A psychological explanation is that people (entrepreneurs) are overconfident in their abilities (Camerer & Lovallo, 1999). Characterizing entry decisions as ambiguous gambles, we alternatively suggest–following Heath and Tversky (1991)–that people seek ambiguity when the source of uncertainty is related to their competence. Overconfidence, as such, plays no role. This hypothesis is confirmed in an experimental study that also documents the phenomenon of reference group neglect. Finally, we emphasize the utility that people gain from engaging in activities that contribute to a sense of competence. This is an important force in economic activity that deserves more explicit attention.Competence, excess entry, entrepreneurship, overconfidence, Leex

Comment: The Need for Syncretism in Applied Statistics

Comment on "The Need for Syncretism in Applied Statistics" [arXiv:1012.1161]Comment: Published in at http://dx.doi.org/10.1214/10-STS308A the Statistical Science (http://www.imstat.org/sts/) by the Institute of Mathematical Statistics (http://www.imstat.org

Forecasting the fast and frugal way: A study of performance and information-processing strategies of experts and non-experts when predicting the World Cup 2002 in soccer

This paper investigates forecasting performance and judgmental processes of experts and non-experts in soccer. Two circumstances motivated the paper: (i) little is known about how accurately experts predict sports events, and (ii) recent research on human judgment suggests that ignorance-based decision-strategies may be reliable. About 250 participants with different levels of knowledge of soccer took part in a survey and predicted the outcome of the first round of World Cup 2002. It was found that the participating experts (i.e., sport journalists, soccer fans, and soccer coaches) were not more accurate than the non-experts. Experts overestimated their performance and were overconfident. While the experts claimed to have relied on analytical approaches and much information, participants with limited knowledge stated that their forecasts were based upon recognition and few pieces of information. The paper concludes that a recognition-based strategy seems to be appropriate when forecasting worldwide soccer events.Expert predictions; Information use; Judgmental forecasting; Overconfidence; Recognition heuristic; Sports forecasting