Richard, there is no reason to assume that any of the candidates achieved 80%. It might be that the least overconfident person was selected from a pool of overconfident candidates.
The author of this paper does not understand that a share repurchase is equivalent to a dividend. (Both are ways of returning capital to investors.) A share repurchase is often preferred because it is more tax efficient. This has nothing to do with overconfidence.Also, the paper implies that 38% is low, or at least lower than average. I don't think this is correct.
Anyone know if this research has been connected to the value-stock premium? It would seem that poor performance would correlate with overconfidence which would correlate with not throwing off dividends which would be correlated with "growth stock" status.
I hypothesize that the problem is that the prediction is doing double duty. Its stated purpose is forecasting; its unstated purpose is as a signal of the predictor's commitment to achieving the goal.
The viral video "Impossible is Nothing" illustrates the overconfidence effect:
"you must believe beyond any reasonable doubt that you will achieve your goals ... failure cannot be considered an option"
Benquo, thanks - made the correction.
Cyan, yes that is plausible.
Richard, there is no reason to assume that any of the candidates achieved 80%. It might be that the least overconfident person was selected from a pool of overconfident candidates.
The point is that 38% is lower than 80%.
The author of this paper does not understand that a share repurchase is equivalent to a dividend. (Both are ways of returning capital to investors.) A share repurchase is often preferred because it is more tax efficient. This has nothing to do with overconfidence.Also, the paper implies that 38% is low, or at least lower than average. I don't think this is correct.
Anyone know if this research has been connected to the value-stock premium? It would seem that poor performance would correlate with overconfidence which would correlate with not throwing off dividends which would be correlated with "growth stock" status.
I hypothesize that the problem is that the prediction is doing double duty. Its stated purpose is forecasting; its unstated purpose is as a signal of the predictor's commitment to achieving the goal.
CEO or CFO? It seems like there should be a huge difference in the effects of overconfidence.