Agenda scientifique

A growing body of evidence now shows that overconfidence provides important interpersonal benefits in strategic interactions. Building on this literature, we investigate whether overconfidence can emerge as a strategy in performance-based competition. More specifically, we test whether overconfident individuals can achieve higher  payoffs than their well-calibrated counterparts by being more successful at deterring their opponents from entering the competition. In addition, we examine whether individuals are sophisticated about the malleability of their beliefs by engaging in motivated reasoning primarily when deterrence is possible. Finally, we study how the possibility to deter affects individuals’ information acquisition strategy.