Overconfidence and Diversification

• 成果类型: Article
• 署名作者: Heller, Yuval
• 署名单位: University of Oxford; University of Oxford
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.6.1.134
• 发表日期: 2014
• 页码: 134-153
• 关键词: model; EVOLUTION; entrepreneurs; confidence; JUDGMENT; biases; error

摘要

Experimental evidence suggests that people tend to be overconfident in the sense that they overestimate the accuracy of their private information. In this paper, we show that risk-averse principals might prefer overconfident agents in various strategic interactions because these agents help diversify the aggregate risk. This may help understanding why successful analysts and entrepreneurs tend to be overconfident. In addition, a different interpretation of the model presents a novel evolutionary foundation for overconfidence, and explains various stylized facts about this bias.