Pragmatic Beliefs and Overconfidence

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Abstract

Several studies indicate that humans are overconfident about their own (relative) abilities. We propose a notion of pragmatic beliefs, and show through an example that this concept can shed light on why overconfidence emerges. Through the example, we also shed light on the idea that ‘bounded rationality’ may arise endogenously in a game—without assuming complexity costs.
Original languageEnglish
Pages (from-to)15-28
Number of pages15
JournalJournal of Economic Behavior and Organization
Volume48
Issue number1
Early online date29 Mar 2002
DOIs
Publication statusPublished - May 2002

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Keywords

  • bounded rationality
  • overconfidence
  • pragmatic beliefs

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