TY  - BOOK
AU  - Lazear,Edward P.
ED  - National Bureau of Economic Research.
TI  - Overconfidence and Occupational Choice
T2  - NBER working paper series
PY  - 2016///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - January 2016; Hardcopy version available to institutional subscribers
N2  - A statistical theory of overconfidence is proposed and applied to the issue of occupational choice.  Individuals who can choose whether to engage in an activity or not must estimate their performance.  The estimates have error and that error has positive expectation among those who engage in the activity.  As a result, an unbiased ex ante estimate of performance in an occupatoin results in an ex post biased estimate of ability among those enter. The statistical theory of overconfidence provides a number of testable implications, most significant of which is that overconfidence should be more prevalent in occupations where estimates of ability are noisier.  This and other implications are tested and found to hold using the Current Population Survey and Panel Study of Income Dynamics data
UR  - https://www.nber.org/papers/w21921
UR  - http://dx.doi.org/10.3386/w21921
ER  -