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How do judgmental overconfidence and overoptimism shape innovative activity?


Herz, Holger; Schunk, Daniel; Zehnder, Christian (2014). How do judgmental overconfidence and overoptimism shape innovative activity? Games and Economic Behavior, 83:1-23.

Abstract

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism is positively associated with innovation, judgmental overconfidence is negatively linked to innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.

Abstract

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism is positively associated with innovation, judgmental overconfidence is negatively linked to innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.

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12 citations in Web of Science®
11 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:January 2014
Deposited On:10 Nov 2014 08:29
Last Modified:17 Dec 2017 14:32
Publisher:Elsevier
ISSN:0899-8256
Publisher DOI:https://doi.org/10.1016/j.geb.2013.11.001
Related URLs:http://www.zora.uzh.ch/70289/

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