This paper experimentally investigates the role of confidence sensitivity and meta-confidence in career-related decision-making. While the effects of overconfidence on economic outcomes have been widely studied, the implications of confidence sensitivity – the ability to distinguish between accurate and inaccurate performance – have been largely overlooked. Yet, in various contexts, a lack of sensitivity can be just as detrimental as overconfidence, as it undermines individuals’ ability to assess their abilities accurately. Additionally, individuals may hold beliefs about their own confidence sensitivity, and they might use such “meta-confidence” beliefs to guide their behavior. In our experiment, participants performed a task and then chose between a competitive or non-competitive compensation scheme. In addition, some participants were given the option to seek performance feedback before committing to a choice. Our results show that confidence sensitivity significantly improves the quality of compensation scheme decisions, while low meta-confidence is associated with increased feedback-seeking behavior prior to the compensation decision. We provide causal evidence for this latter finding: a treatment condition designed to reduce meta-confidence led to an increased willingness to seek feedback. Overall, this paper underscores the richness of individuals’ beliefs about their abilities and demonstrates how an in-depth analysis of these beliefs, using tools from cognitive psychology, can offer new insights into economic decision-making.
Quentin Cavalan (GATE – EM Lyon) – Beyond Overconfidence: Exploring the Role of Sensitivity and Meta-Confidence in Career Choices
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