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Do we measure overconfidence? A closer look at the interval production task


Langnickel, Ferdinand; Zeisberger, Stefan (2016). Do we measure overconfidence? A closer look at the interval production task. Journal of Economic Behavior & Organization, 128:121-133.

Abstract

The most common test for overconfidence in the form of miscalibration—the Interval Production task (IP)—is based on the assumption that people internalize requested confidence levels. We demonstrate experimentally that decision makers’ perceived confidence is, however, unaffected by variations in the requested confidence level. In addition, we find large heterogeneity in perceived confidence that the traditional IP measure fails to account for. We show that the alternative measure based on decision makers’ perceived confidence by contrast yields coherent, moderate overconfidence levels. Our evidence suggests that the consistency of the two measures is limited and that they are related to different individual characteristics.

Abstract

The most common test for overconfidence in the form of miscalibration—the Interval Production task (IP)—is based on the assumption that people internalize requested confidence levels. We demonstrate experimentally that decision makers’ perceived confidence is, however, unaffected by variations in the requested confidence level. In addition, we find large heterogeneity in perceived confidence that the traditional IP measure fails to account for. We show that the alternative measure based on decision makers’ perceived confidence by contrast yields coherent, moderate overconfidence levels. Our evidence suggests that the consistency of the two measures is limited and that they are related to different individual characteristics.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Overconfidence; Miscalibration; Methodology; Experimental economics; Experimental finance
Language:English
Date:20 May 2016
Deposited On:27 May 2016 19:25
Last Modified:06 Jun 2016 01:05
Publisher:Elsevier
ISSN:0167-2681
Publisher DOI:https://doi.org/10.1016/j.jebo.2016.04.019
Other Identification Number:merlin-id:13377

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