People typically update their beliefs about their own abilities too little in response to feed-back, a phenomenon known as “conservatism”, and some studies suggest that they overweight good relative to bad signals (“asymmetry”). We measure individual conservatism and asymmetry in three tasks that test different cognitive skills, and study entry into a winner-takes-all competition based on similar skills. We show that individual differences in feedback responsiveness explain an important part of the variation in confidence and competition entry decisions. Conservatism is correlated across tasks and predicts competition entry both by influencing beliefs and independently of beliefs, suggesting it can be considered a personal trait. Subjects tend to be more conservative in tasks that they see as more ego-relevant and women are more conservative than men. Asymmetry is less stable across tasks, but predicts competition entry by increasing self-confidence.
# 16-043/I (2016-06-03)
- Thomas Buser, University of Amsterdam, the Netherlands; Leonie Gerhards, University of Hamburg, Germany; Joël J. van der Weele, University of Amsterdam, the Netherlands
- Bayesian updating, feedback, confidence, identity, competitive behavior
- JEL codes:
- C91, C93, D83