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All HBS Web
(71)
- News (11)
- Research (52)
- Events (4)
- Multimedia (1)
- Faculty Publications (22)
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- 2018
- Working Paper
Is Overconfidence a Motivated Bias? Experimental Evidence
By: Jennifer M. Logg, Uriel Haran and Don A. Moore
Are overconfident beliefs driven by the motivation to view oneself positively? We test the relationship between motivation and overconfidence using two distinct, but often conflated, measures: better-than-average (BTA) beliefs and overplacement. Our results suggest...
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Keywords:
Self-perception;
Overconfidence;
Motivation;
Better-Than-Average Effect;
Specifically;
Personal Characteristics;
Perception;
Motivation and Incentives;
Cognition and Thinking
Logg, Jennifer M., Uriel Haran, and Don A. Moore. "Is Overconfidence a Motivated Bias? Experimental Evidence." Harvard Business School Working Paper, No. 18-099, April 2018.
- 2022
- Article
Leadership & Overconfidence
By: Don A Moore and Max H. Bazerman
Expressions of confidence can give leaders credibility. In the political realm, they can earn votes and public approval for decisions made in office. Such support is justified when the confidence displayed is truly a sign that a leader (whether a candidate or an...
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Moore, Don A., and Max H. Bazerman. "Leadership & Overconfidence." Behavioral Science & Policy 8, no. 2 (2022): 59–69.
- May 2011
- Article
Overconfidence by Bayesian Rational Agents
This paper derives two mechanisms through which Bayesian-rational individuals with differing priors will tend to be relatively overconfident about their estimates and predictions, in the sense of overestimating the precision of these estimates. The intuition behind one...
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Keywords:
Decision Choices and Conditions;
Forecasting and Prediction;
Knowledge Acquisition;
Risk Management;
Prejudice and Bias
Van den Steen, Eric J. "Overconfidence by Bayesian Rational Agents." Management Science 57, no. 5 (May 2011): 884–896.
- Research Summary
A Strategic Rationale for Having Overconfident Managers, 2004
We analyze whether it might be desirable for a firm to hire an overconfident manager for strategic reasons. We analyze a tournament type version of Bertrand competition and a linear demand Cournot model. In each case there is an R&D stage where firms can invest in cost...
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- 2010
- Working Paper
Overconfidence by Bayesian Rational Agents
This paper derives two mechanisms through which Bayesian-rational individuals with differing priors will tend to be relatively overconfident about their estimates and predictions, in the sense of overestimating the precision of these estimates. The intuition behind one...
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Van den Steen, Eric. "Overconfidence by Bayesian Rational Agents." Harvard Business School Working Paper, No. 11-049, November 2010.
- Article
Ensembles of Overfit and Overconfident Forecasts
By: Y. Grushka-Cockayne, V.R.R. Jose and K. C. Lichtendahl
Firms today average forecasts collected from multiple experts and models. Because of cognitive biases, strategic incentives, or the structure of machine-learning algorithms, these forecasts are often overfit to sample data and are overconfident. Little is known about...
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Grushka-Cockayne, Y., V.R.R. Jose, and K. C. Lichtendahl. "Ensembles of Overfit and Overconfident Forecasts." Management Science 63, no. 4 (April 2017): 1110–1130.
- 21 Apr 2010
- Working Paper Summaries
Why Do Firms Use Non-Linear Incentive Schemes? Experimental Evidence on Sorting and Overconfidence
Keywords:
by Ian Larkin & Stephen Leider
- 27 Apr 2018
- Working Paper Summaries
Is Overconfidence a Motivated Bias? Experimental Evidence
- Forthcoming
- Article
A Potential Pitfall of Passion: Passion Is Associated with Performance Overconfidence
By: Erica R. Bailey, Kai Krautter, Wen Wu, Adam D. Galinsky and Jon M. Jachimowicz
Having passion is almost universally lauded. People strive to follow their passion at work, and organizations increasingly seek out passionate employees. Supporting the benefits of passion, prior research finds a robust relationship between passion and higher levels of...
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Bailey, Erica R., Kai Krautter, Wen Wu, Adam D. Galinsky, and Jon M. Jachimowicz. "A Potential Pitfall of Passion: Passion Is Associated with Performance Overconfidence." Social Psychological & Personality Science (forthcoming).
- May 2022
- Article
Complex Disclosure
By: Ginger Zhe Jin, Michael Luca and Daniel Martin
We present evidence that unnecessarily complex disclosure can result from strategic incentives to shroud information. In our lab experiment, senders are required to report their private information truthfully, but can choose how complex to make their reports. We find...
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Keywords:
Disclosure;
Experiments;
Naiveté;
Overconfidence;
Corporate Disclosure;
Policy;
Information;
Complexity;
Strategy;
Consumer Behavior
Jin, Ginger Zhe, Michael Luca, and Daniel Martin. "Complex Disclosure." Management Science 68, no. 5 (May 2022): 3236–3261.
- September 2008 (Revised September 2010)
- Exercise
Exercise on Estimation
By: Jason Riis and John T. Gourville
This exercise is meant to assess students' level of confidence around everyday business and general knowledge questions, for the purpose of identifying where they are overconfident and underconfident.
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Riis, Jason, and John T. Gourville. "Exercise on Estimation." Harvard Business School Exercise 509-022, September 2008. (Revised September 2010.)
- 15 May 2024
- Research & Ideas
A Major Roadblock for Autonomous Cars: Motorists Believe They Drive Better
Think you’re a better driver than most people? You’re not alone. And you may be one reason self-driving cars haven’t taken off. About 77 percent of participants surveyed in a new study rated themselves superior to automated vehicles, while 60 percent thought other...
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- Article
Trimmed Opinion Pools and the Crowd's Calibration Problem
By: Victor Richmond R. Jose, Yael Grushka-Cockayne and Kenneth C. Lichtendahl
We introduce an alternative to the popular linear opinion pool for combining individual probability forecasts. One of the well-known problems with the linear opinion pool is that it can be poorly calibrated. It tends toward underconfidence as the crowd's diversity...
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Jose, Victor Richmond R., Yael Grushka-Cockayne, and Kenneth C. Lichtendahl. "Trimmed Opinion Pools and the Crowd's Calibration Problem." Management Science 60, no. 2 (February 2014): 463–475.
- May 2012
- Article
Incentive Schemes, Sorting and Behavioral Biases of Employees: Experimental Evidence
By: Ian Larkin and Stephen Leider
We investigate how the convexity of a firm's incentives interacts with worker overconfidence to affect sorting decisions and performance. We demonstrate experimentally that overconfident employees are more likely to sort into a non-linear incentive scheme over a linear...
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Keywords:
Motivation and Incentives;
Performance;
Behavior;
Prejudice and Bias;
Decisions;
Employees;
Wages
Larkin, Ian, and Stephen Leider. "Incentive Schemes, Sorting and Behavioral Biases of Employees: Experimental Evidence." American Economic Journal: Microeconomics 4, no. 2 (May 2012).
- 18 Feb 2011
- Working Paper Summaries
A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation
- Article
Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics
By: Thomas Astebro, Holger Herz, Ramana Nanda and Roberto A. Weber
There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics—for why...
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Astebro, Thomas, Holger Herz, Ramana Nanda, and Roberto A. Weber. "Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics." Journal of Economic Perspectives 28, no. 3 (Summer 2014): 49–70.
- July 2023
- Article
Takahashi-Alexander Revisited: Modeling Private Equity Portfolio Outcomes Using Historical Simulations
By: Dawson Beutler, Alex Billias, Sam Holt, Josh Lerner and TzuHwan Seet
In 2001, Dean Takahashi and Seth Alexander of the Yale University Investments Office developed a deterministic model for estimating future cash flows and valuations for the Yale endowment’s private equity portfolio. Their model, which is simple and intuitive, is still...
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Beutler, Dawson, Alex Billias, Sam Holt, Josh Lerner, and TzuHwan Seet. "Takahashi-Alexander Revisited: Modeling Private Equity Portfolio Outcomes Using Historical Simulations." Journal of Portfolio Management 49, no. 7 (July 2023): 144–158.
- January–February 2015
- Article
The Art of Giving and Receiving Advice
By: David A. Garvin and Joshua D. Margolis
The article looks at giving and receiving advice as an element of organizational leadership and managerial ability. It suggests that the skills related to these actions, such as self-awareness and diplomacy, are not innate talents but can be learned. It lists problems...
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Garvin, David A., and Joshua D. Margolis. "The Art of Giving and Receiving Advice." Harvard Business Review 93, nos. 1/2 (January–February 2015): 60–71.
- Article
Is it Better to Average Probabilities or Quantiles?
By: Kenneth C. Lichtendahl, Yael Grushka-Cockayne and Robert L. Winkler
We consider two ways to aggregate expert opinions using simple averages: averaging probabilities and averaging quantiles. We examine analytical properties of these forecasts and compare their ability to harness the wisdom of the crowd. In terms of location, the two...
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Keywords:
Probability Forecasts;
Quantile Forecasts;
Expert Combination;
Linear Opinion Pooling;
Forecasting and Prediction
Lichtendahl, Kenneth C., Yael Grushka-Cockayne, and Robert L. Winkler. "Is it Better to Average Probabilities or Quantiles?" Management Science 59, no. 7 (July 2013): 1594–1611.
- April 2011
- Article
Why Leaders Don't Learn from Success
By: Francesca Gino and Gary P. Pisano
We argue that for a variety of psychological reasons, it is often much harder for leaders and organizations to learn from success than to learn from failure. Success creates three kinds of traps that often impede deep learning. The first is attribution error or the...
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Keywords:
Learning;
Innovation and Management;
Leadership;
Failure;
Success;
Performance Evaluation;
Prejudice and Bias
Gino, Francesca, and Gary P. Pisano. "Why Leaders Don't Learn from Success." Harvard Business Review 89, no. 4 (April 2011): 68–74.