Institute for Research on Labor and Employment

Scholars have recently proposed that overconfidence pervades self-judgment because of the social benefits it provides individuals, such as higher status in groups (Anderson, Brion, & Moore, 2010). A counter-argument to this social-functional account of overconfidence is that the possible social costs of overconfidence could outweigh its benefits. Specifically, individuals could be severely punished by groups if their overconfidence were to become apparent to others. This paper examines social reactions to overconfidence by exploring whether groups in fact punish individuals revealed to be overconfident. In three laboratory studies, we found that groups did not react negatively to individuals revealed to be overconfident and in fact tended to view overconfident individuals as more socially skilled. This research lends further empirical support to the social-functional account of overconfidence by suggesting that the status-related benefits of overconfidence outweigh the possible social costs.