Social and Behavioral Sciences Commons^™

Overconfidence And Excess Entry: A Comparison Between Students And Managers, A. Felipe Rodrigues, Newton Da Costa Jr, Sergio Da Silva

Sergio Da Silva

Overconfidence can lead to excessive business entry. Here we replicate the pioneer experiment finding this nexus (Camerer and Lovallo 1999) and extend it in two major directions: (1) to consider managers as well as student subjects and (2) to explicitly take into account selected characteristics of the manager subjects. We find that managers are more prone to the nexus overconfidence-excess entry than students are. In particular, we find that left-handed, married, and emotionally aroused managers are more prone to excess entry.