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Overconfidence and Excess Entry: An Experimental Approach

Camerer, Colin F. and Lovallo, Dan (1999) Overconfidence and Excess Entry: An Experimental Approach. American Economic Review, 89 (1). pp. 306-318. ISSN 0002-8282.

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Psychological studies show that most people are overconfident about their own relative abilities, and unreasonably optimistic about their futures (e.g., Neil D. Weinstein, 1980; Shelly E. Taylor and J. D. Brown, 1988). When assessing their position in a distribution of peers on almost any positive trait-like driving ability (Ola Svenson, 1981), income prospects, or longevity-a vast majority of people say they are above the average, although of course, only half can be (if the trait is symmetrically distributed).

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Additional Information:© 1999 American Economic Association. Help and comments were received from Daniel Kahneman, Marc Knez, Matthew Rabin, David Teece, Dick Thaler, participants at the MacArthur Foundation Preferences Group, the 1995 J/DM Society, workshops at the Universities of Chicago and Colorado, UCLA, Harvard Business School, and Wharton, and several anonymous referees. Gail Nash provided superb secretarial help and Roberto Weber provided research assistance. The research was funded by National Science Foundation Grant No. SBR 95-11001.
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Official Citation:Camerer, C. and D. Lovallo (1999). "Overconfidence and Excess Entry: An Experimental Approach." The American Economic Review 89(1): 306-318. Stable URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:21995
Deposited By: Tony Diaz
Deposited On:11 Feb 2011 22:19
Last Modified:26 Dec 2012 12:53

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