Working Papers

"Overconfidence and Elitism" (Job Market Paper) [pdf]

Abstract: I propose a behavioral foundation for the practice of elitism and show that it can give rise to inaccurate statistical discrimination against candidates who lack elite credentials. My theoretical model demonstrates that hirers' overconfidence in own ability, coupled with personal success, can cause them to overvalue elite credentials beyond what these credentials signal about candidates' underlying productivity. Results from a controlled laboratory experiment confirm the model's predictions: on average, subjects with a higher level of confidence have a higher relative willingness to pay for candidates with similar credentials to themselves. By simulating the competitive labor market outcome using the experimental data, I find that an increase in hirer confidence raises elite firms' tendency to hire candidates with elite credentials, thereby leading to a greater degree of labor market sorting in equilibrium. Given that overconfidence has been widely documented, the results suggest that this channel may be present in hiring decisions in practice.

"Overconfidence and In-Group Effects in Preferences for Redistribution: An Experimental Study" [pdf]

(with Oleg Semenov)

Abstract: Studies have documented that the economically successful generally favor less redistribution than the economically unsuccessful. We show that two behavioral elements, overconfidence in own ability and in-group favoritism, can exacerbate this divide in preferences for redistribution beyond what is caused by rational self-interest. We run a laboratory experiment where participants are randomly assigned income based on task performance and chance. After observing their income, they choose redistributive tax rates on other subjects' assigned income, where a higher tax rate corresponds to lower resulting inequality. We find effects of both overconfidence and in-group favoritism: first, due to mistaken beliefs about own ability, overconfident subjects choose less redistribution when they experience success and more redistribution when they experience failure. Second, we find evidence of in-group favoritism: successful subjects generally choose less redistribution than unsuccessful subjects. Interestingly, however, the strength of in-group favoritism varies depending on how income is assigned: it is strongest when income is assigned based on own performance, and vanishes completely when income is assigned randomly. The findings suggest that behavioral elements can play a significant role in shaping preferences for redistribution.

"Inaction Regret and its Implications for Task Preparation"

Draft available upon request.

Abstract: In the process of preparing for tasks, is it possible that some individuals systematically work so hard that they hurt their own chances of success? I refer to this behavior as inefficient overworking. I develop a model of task preparation, and show that individuals may sometimes behave this way due to inaction regret aversion. Inaction regret is a specific type of action-based regret, where individuals attempt to decrease their sensitivity towards potential future regret by spending more effort preparing for the task. Furthermore, I study how feedback, a common treatment to study regret in experiments, affects individuals' preparation behaviour through regret. Feedback will not matter through informational content, but it may increase or decrease the incidence of inefficient overworking by affecting how salient regret is to individuals. I also demonstrate that outcome regret aversion (Loomes, Sugden, 1982) and disappointment aversion (Gul, 1991) cannot explain inefficient overworking.

Work in Progress

"Ability-Related Feedback and Effort Provision in Threshold-Type Tasks"

(with Kristin Petersmann and Oleg Semenov)