CEU Electronic Theses and Dissertations, 2016
| Author | Dömötör, Erika |
|---|---|
| Title | Practice Makes Perfect? The Effect of Experience on Overconfidence - Empirical Evidence from the Data Set of Budapest Marathons |
| Summary | This thesis investigates the determinants of overconfidence, in particular, the effect of experience on the overestimation of one's actual performance. The question is relevant for many fields in economics, for example, for labor economics, contract theory and finance. The results of the Budapest Marathons from 1999 to 2014 serve as the database in which overconfident behavior is measured. In the methodology of the thesis an OLS model of overconfidence is built with the explanatory variables of gender, age, skill and experience. In line with previous works, I find that on average males are more overconfident than females, while age has a U-shaped effect with the minimum around the middle age. It is also shown that skill is negatively correlated with overconfidence, according to the Dunning-Kruger effect. The thesis contributes to the literature by enhancing the model with the effect of experience. The upcoming self-selection bias of the proxy for experience is treated with an insrumental variable method. After dealing with this endogeneity issue, the model shows no significant effect of experience on overconfidence. |
| Supervisor | De Chiara, Alessandro |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2016/domotor_erika.pdf |
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