Overconfidence, underconfidence, and welfare

Takao Asano; Takuma Kunieda; Akihisa Shibata

doi:10.1628/093245615X14273596659161

Overconfidence, underconfidence, and welfare

Takao Asano
, Takuma Kunieda
, Akihisa Shibata

City University of Hong Kong

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

Abstract

Using a simple framework due to Cooper and John (1988) and Cooper (1999), this paper derives the conditions under which overconfidence and underconfidence of agents lead to Pareto improvement. We show that an agent’s overconfidence in a game exhibiting strategic complementarity and positive spillovers and an agent’s underconfidence in a game exhibiting strategiccomplementarity and negative spillovers can lead to Pareto improvement.

Original language	English
Pages (from-to)	372-384
Journal	Journal of Institutional and Theoretical Economics
Volume	171
Issue number	2
DOIs	https://doi.org/10.1628/093245615X14273596659161
Publication status	Published - 1 Jun 2015

Access Output

10.1628/093245615X14273596659161

Other Access Options

Check CityUHK Library

Permanent Link

Right click to copy link

Cite this

@article{074bee846d384abe89da2901b3a789b4,

title = "Overconfidence, underconfidence, and welfare",

abstract = "Using a simple framework due to Cooper and John (1988) and Cooper (1999), this paper derives the conditions under which overconfidence and underconfidence of agents lead to Pareto improvement. We show that an agent{\textquoteright}s overconfidence in a game exhibiting strategic complementarity and positive spillovers and an agent{\textquoteright}s underconfidence in a game exhibiting strategiccomplementarity and negative spillovers can lead to Pareto improvement.",

author = "Takao Asano and Takuma Kunieda and Akihisa Shibata",

year = "2015",

month = jun,

day = "1",

doi = "10.1628/093245615X14273596659161",

language = "English",

volume = "171",

pages = "372--384",

journal = "Journal of Institutional and Theoretical Economics",

issn = "0932-4569",

publisher = "JCB Mohr",

number = "2",

}

TY - JOUR

T1 - Overconfidence, underconfidence, and welfare

AU - Asano, Takao

AU - Kunieda, Takuma

AU - Shibata, Akihisa

PY - 2015/6/1

Y1 - 2015/6/1

N2 - Using a simple framework due to Cooper and John (1988) and Cooper (1999), this paper derives the conditions under which overconfidence and underconfidence of agents lead to Pareto improvement. We show that an agent’s overconfidence in a game exhibiting strategic complementarity and positive spillovers and an agent’s underconfidence in a game exhibiting strategiccomplementarity and negative spillovers can lead to Pareto improvement.

AB - Using a simple framework due to Cooper and John (1988) and Cooper (1999), this paper derives the conditions under which overconfidence and underconfidence of agents lead to Pareto improvement. We show that an agent’s overconfidence in a game exhibiting strategic complementarity and positive spillovers and an agent’s underconfidence in a game exhibiting strategiccomplementarity and negative spillovers can lead to Pareto improvement.

UR - https://www.scopus.com/pages/publications/84942474355

UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-84942474355&origin=recordpage

U2 - 10.1628/093245615X14273596659161

DO - 10.1628/093245615X14273596659161

M3 - RGC 21 - Publication in refereed journal

SN - 0932-4569

VL - 171

SP - 372

EP - 384

JO - Journal of Institutional and Theoretical Economics

JF - Journal of Institutional and Theoretical Economics

IS - 2

ER -

Overconfidence, underconfidence, and welfare

Abstract

Access Output

Other Access Options

Permanent Link

Other Files and Links

Fingerprint

Cite this