Join us for the next ICES Experimental Economics Seminar of the semester, featuring Homa Zarghamee.
Professor Zarghamee, of Barnard College, will discuss her paper Positive Affect and Overconfidence: A Laboratory Investigation. The talk will take place on Friday, April 5, from 4:00 to 5:30pm, in room 648 of the Truland Building, Arlington campus.
We conduct a carefully designed random-assignment experiment to investigate whether mild positive affect impacts overconfidence. Our result indicates that, compared to neutral affect, mild positive affect significantly increases overconfidence, thereby reducing earnings. This result is driven by men: despite affect-inducement being equally effective across gender, men’s overconfidence is significantly increased by positive affect, while women’s is unchanged. Our result may help explain the relationship between mood and speculative bubbles and between mood and trading volume: specifically, overconfidence may be the intermediary. Further, our result has implications for the effect of happiness on overconfidence and the role of emotions in economic decision-making, in general. Finally, we reconfirm the ubiquity of overconfidence and start to explore its determinants.
Visit the Seminar schedule to learn more about upcoming speakers.