Managing Self-Confidence: Theory and Experimental Evidence
Markus M. Möbius, Muriel Niederle, Paul Niehaus, Tanya S. Rosenblat
NBER Working Paper Series · 2011
Abstract
Studies how people update beliefs about their own ability after receiving feedback, testing whether self-relevant belief-updating departs from Bayes' rule in self-serving ways.
Methodology
Experiment giving subjects noisy feedback about their performance on an IQ quiz and eliciting their beliefs, so that observed updating can be compared directly to the Bayesian benchmark.
Findings
Updating about the self is both conservative and asymmetric: people revise less than Bayes' rule prescribes and weight positive feedback more than equally informative negative feedback, sustaining overconfidence. The pattern is consistent with an ego-utility motive to protect a favorable self-image.
Applied nudge
Because people discount unflattering feedback, deliver corrective information in ways that protect self-image (framing as growth, private delivery) so it is actually incorporated rather than defensively dismissed.
Citation
Möbius, M. M., Niederle, M., Niehaus, P., & Rosenblat, T. S. (2011). Managing self-confidence: Theory and experimental evidence. NBER Working Paper No. 17014.
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