Overconfidence and Gender Equality in the Labor Market

Arbeitspapier

Gender differences in overconfidence have been extensively documented in the empirical literature, but the implications for labor market outcomes are not well understood. In this paper, we analyze how men's relatively higher overconfidence, combined with competitive job incentives, affects gender equality in the labor market and discuss policy implications. The vehicle of analysis is a promotion-signaling model in which wages are realistically determined by market forces. We find that overconfident workers exert more effort to be promoted, and even though they have lower expected ability conditional on promotion, they are more likely to be promoted and experience superior wage growth. Because overconfident workers compete fiercely, they incur higher effort costs and discourage their peers, and we find that overconfidence can be either self-serving or self-defeating.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10339

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): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/271983
• Last update: 10.03.2025, 11:43 AM CET