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The curse of knowledge increases self-selection into competition: experimental evidence

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Danz, David

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract The psychology literature provides ample evidence that people have difficulties taking the perspective of less-informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses. (author's abstract)
Keywords knowledge; self-confidence; competition; incentive system; experiment; information; enterprise; behavior
Classification Social Psychology; Sociology of Knowledge; National Economy
Free Keywords Überschätzung
Document language English
Publication Year 2014
City Berlin
Page/Pages 64 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Verhalten auf Märkten, SP II 2014-207
Status Published Version; reviewed
Licence Deposit Licence - No Redistribution, No Modifications