Identifying the Effects of Unjustified Confidence versus Overconfidence: Lessons Learned from Two Analytic Methods. (3rd July 2013)

• Record Type: Journal Article
• Authors: Parker, Andrew M.; Stone, Eric R.
• Is Part Of: Journal of behavioral decision making. Volume 27:Number 2(2014:Apr.)
• Page Start: 134
• Page End: 145
• Publication Date: 2013-07-03
• Subjects: Decision making -- Periodicals; Managerial economics -- Periodicals; Behavior -- Periodicals; Decision Making -- Periodicals; Prise de décision -- Périodiques; Économie d'entreprise -- Périodiques; 153.83
• DOI: 10.1002/bdm.1787
• Languages: English
• ISSNs: 0894-3257

Abstract

<abstract abstract-type="main"> <title>ABSTRACT</title> <p>One of the most common findings in behavioral decision research is that people have unrealistic beliefs about how much they know. However, demonstrating that misplaced confidence exists does not necessarily mean that there are costs to it. This paper contrasts two approaches toward answering whether misplaced confidence is good or bad, which we have labeled the overconfidence and unjustified confidence approach. We first consider conceptual and analytic issues distinguishing these approaches. Then, we provide findings from a set of simulations designed to determine when the approaches produce different conclusions across a range of possible confidence–knowledge–outcome relationships. Finally, we illustrate the main findings from the simulations with three empirical examples drawn from our own data. We conclude that the unjustified confidence approach is typically the preferred approach, both because it is appropriate for testing a larger set of psychological mechanisms as well as for methodological reasons. Copyright © 2013 John Wiley &amp; Sons, Ltd.</p> </abstract>