Overconfidence and gender equality in the labor market

Arbeitspapier

Using a promotion signaling model in which wages are realistically shaped by market forces, we analyze how male overconfidence combined with competitive workplace incentives affects gender equality in the labor market. Our main result is that overconfident workers exert more effort to be promoted, which translates into a higher probability of promotion and superior wage growth. Interestingly, workers who are not overconfident have higher expected ability conditional on promotion than overconfident workers. However, overconfident workers accumulate more human capital through learning-by-doing and therefore have higher expected productivity. Because overconfident workers compete fiercely, they incur higher effort costs and discourage their colleagues, and we find that overconfidence can be either self-serving or self-defeating for the overconfident worker.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECONtribute Discussion Paper ; No. 220

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Economics of Gender; Non-labor Discrimination ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Personnel Economics: Firm Employment Decisions; Promotions ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Subject: overconfidence ; promotion ; competition ; gender gap ; tournament ; theory

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bastani, Spencer ; Giebe, Thomas ; Gürtler, Oliver
• Event: Veröffentlichung
• (who): University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
• (where): Bonn and Cologne
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/278396
• Last update: 10.03.2025, 11:45 AM CET