The curse of knowledge increases self-selection into competition: Experimental evidence

Arbeitspapier

The psychology literature provides ample evidence that people have difficulties taking the perspective of less-informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2014-207

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Information, Knowledge, and Uncertainty: General ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Expectations; Speculations
• Subject: curse of knowledge ; hindsight bias ; information projection ; overconfidence ; sorting ; incentive schemes ; competition ; beliefs ; experiments

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Danz, David
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/101453
• Last update: 10.03.2025, 11:42 AM CET