Atlantic Economic Journal

, Volume 38, Issue 2, pp 183–196

Know Thyself: Competence and Self-awareness

Article

DOI: 10.1007/s11293-010-9226-2

Cite this article as:
Ferraro, P.J. Atl Econ J (2010) 38: 183. doi:10.1007/s11293-010-9226-2

Abstract

Economic analysis of asymmetric information typically starts with the assumption that individuals know more about their own characteristics than outside observers. This assumption implies that individuals can accurately assess their own competence in a given domain. However, individuals can only judge their competence if they are sufficiently competent. Results from field experiments contradict predictions from economic theories that assume self-aware agents, but are consistent with predictions from theories that incorporate a positive correlation between competence and self-awareness in a given domain. This correlation explains some of the overconfidence observed among economic agents and implies a structure on decision errors that can be exploited to make novel predictions in important areas of economics.

Keywords

Overconfidence Competence Asymmetric information Gender Economic experiment 

JEL

C93 D82 

Supplementary material

11293_2010_9226_MOESM1_ESM.doc (54 kb)
ESM 1(DOC 53 kb)

Copyright information

© International Atlantic Economic Society 2010

Authors and Affiliations

  1. 1.Department of Economics, Andrew Young School of Policy StudiesGeorgia State UniversityAtlantaUSA

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