The DSC is partnering with the Department of Marketing and Logistics at Fisher College of Business to sponsor a talk by Dr. Stephen Spiller of UCLA. The talk will take place on Friday, December 6 from 10:30-noon in Gerlach Hall 285 (please note change in location). His work examines the psychology of fundamental economic concepts. This includes how and when people consider their opportunity costs, how they plan for the future, how they reason about product differentiation, and how they think about stocks versus flows. Dr. Spiller also works to translate and disseminate best practices in data analysis and reporting for behavioral researchers. If you plan on attending, please RSVP to Jackie Pittman at pittman.92@osu.edu by December 2, end of day.
Talk Title: Widely-Used Measures of Overconfidence Are Confounded With Ability
Abstract: The overconfidence concept is one of the great success stories of psychological research, influencing research in other disciplines as well as discourse in the popular press, business, and public policy. Relative to underconfidence, overconfidence at various tasks is purportedly associated with greater narcissism, lower anxiety regarding those tasks, higher status, greater savings, more planning, and numerous other differences. Yet much of this evidence may merely reflect that there are associations with ability rather than overconfidence. This results from two underappreciated properties of typical measures of overconfidence. First, performance is an imperfect measure of ability; accounting for performance does not sufficiently account for ability. Second, self-evaluations of performance should reflect ability in addition to performance; because performance is ambiguous, people should use prior beliefs about their ability. I show these basic principles imply that commonly-used measures of overconfidence are confounded with ability. I support these analytical results by reexamining previously-published findings. In the first analysis, I find overconfidence predicts subsequent performance, consistent with overconfidence as a signal of ability but inconsistent with overconfidence as a bias. In the second set of analyses, I find the purported association between overconfidence and other proposed constructs can be adequately explained through ability alone. I close with recommendations on approaches to recognize and reduce the extent of the problem. This model serves as a stark reminder: when researchers propose that differences in overconfidence are associated with other behaviors, beliefs, or evaluations, they must account for the possibility that differences in ability provide a sufficient explanation.
If you would be interested in meeting with Dr. Spiller, please email Xiaoyan Deng at deng.84@osu.edu.