Confidence and career choices: An experiment

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Confidence is often seen as an important determinant of success. However, empirical evidence regarding the causal effect of confidence on choices is sparse. Using a stylized laboratory experiment, we examine the effect of an increase in confidence on two important labor market choices: (i) the amount of ability-contingent earnings risk to take on, and (ii) the subsequent effort choice. We find that increased confidence leads subjects to take on more ability-contingent earnings risk. However, effort levels are unaffected. Overall, the upward shift in confidence is detrimental for low-ability workers as a result of high baseline levels of confidence.
Original languageEnglish
JournalThe Scandinavian Journal of Economics
Issue number1
Pages (from-to)35-68
Publication statusPublished - 2022

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