# 11-151/1 (2011-10-27)

Author(s)
Gary Charness, UCSB; Aldo Rustichini, University of Minnesota; Jeroen van de Ven, University of Amsterdam
Keywords:
Self-confidence, overconfidence, strategic deterrence, unconscious behavior, selfdeception
JEL codes:
A12, C91, D03, D82

We examine factors that may contribute to 'overconfidence' in relative ability on an intelligence test. We test experimentally for evidence of self-esteem concerns and instrumental strategic concerns. Errors in Bayesian updating are rare when the information does not involve own relative ability, but far more common when it does, suggesting self-esteem issues. There is also strong evidence that males state higher levels of confidence in relative ability when this precedes a tournament; as entry is predicted by relative confidence, this can be an effective deterrent. Inflating confidence can be part of an equilibrium strategy, providing a rationale for strategic overconfidence.