Is Underconfidence Favored over Overconfidence? An Experiment on the Perception of a Biased Self-Assessment

This paper reports findings of a laboratory experiment, which
explores how elfassessment regarding the own relative performance
is perceived by others. In particular, I investigate whether
overconfident subjects or underconfident subjects are considered as
more likable by others, and who of the two is expected to achieve a
higher performance in a real effort task. I observe that
underconfidence beats overconfidence in both respects.
Underconfident subjects are rewarded significantly more often than
overconfident subjects, and are significantly more often expected
to win the competitive real-effort task. It seems as if subjects
being less convinced of their performance are taken as more
congenial and are expected to be more ambitious to improve, whereas
overconfident subjects are rather expected to rest on their high
beliefs. While subjects do not anticipate the stronger performance
signal of underconfidence, they anticipate its higher sympathy
value. The comparison to a non-strategic setting shows that men
strategically deflate their self-assessment to be rewarded by
others. Women, in contrast, either do not deflate their
self-assessment or do so even in non-strategic situations, a
behavior that might be driven by nonmonetary image concerns of
women.