Self-Confidence, Overconfidence and Prenatal Testorone Exposure: Evidence from the Lab

P.S. Dalton, S. Ghosal

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Abstract

Abstract: This paper examines whether the degree of confi dence and overconfi dence in one's ability is determined biologically. In particular, we study whether foetal testosterone exposure correlates with an incentive-compatible measure of con fidence within an experimental setting. We fi nd that men (rather than women) who were exposed to high testosterone levels in their mother's womb are less likely to overestimate their actual performance, which in turn helps them to gain higher monetary rewards. Men exposed to low prenatal testosterone levels, instead, set unrealistically high expectations which results in self-defeating behavior. These results from the lab are able to recon- cile hitherto disconnected evidence from the fi eld, by providing a link between traders' overcon fidence bias, long-term financial returns and prenatal testosterone exposure.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages22
Volume2014-014
Publication statusPublished - 2014

Publication series

NameCentER Discussion Paper
Volume2014-014

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Keywords

  • 2D

Cite this

Dalton, P. S., & Ghosal, S. (2014). Self-Confidence, Overconfidence and Prenatal Testorone Exposure: Evidence from the Lab. (CentER Discussion Paper; Vol. 2014-014). Tilburg: Economics.