The Relationship Between the Dunning-Kruger Effect and Competition Entry

The Relationship Between the Dunning-Kruger Effect and Competition Entry

Studies show that most people are overconfident about their own relative abilities, even when these abilities are unsubstantiated. Overconfidence plays an important role in a person’s decision to enter into a competition and this decision can have a significant effect on economic behavior. In the present study, 30 Wagner College students were asked to answer a 10 question quantitative reasoning questionnaire with five subsequent questions that asked them how difficult they thought the questionnaire was, to compare how they think they scored on this questionnaire to other college students based on percentile rank, and to note how many questions out of 10 they think they answered correctly. Participants were also asked if they would like to enter their scores into competition with other Wagner College students and if they would like to enter their scores into competition with Harvard University students. The relationship between overconfidence and entry into competition were then analyzed. Evidence of overconfidence was present, but the results did not support the hypothesis that the proportion of overconfident Wagner students who enter into a competition with other Wagner students is greater than the proportion of overconfident Wagner students who enter into a competition with Harvard students. Implications of this study and future applications of the model are discussed.

Shteinberg, Debra

5/1/2020

Behavioral Economics

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41 pages

eng

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2020-economics-shteinberg

Wagner College, Staten Island, NY

Paper

2020