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Event

30 July 2019

The School of Economics and Finance is hosting internal seminars, the Brown Bag Seminar Series, where faculty, PhD students and external guests are invited to present their ongoing work to the School. The seminars run for 1 hour and a light lunch is served. Staff and students are encouraged to have discussions following the presentations.

Speaker:

Alice Solda from QUT School of Economics and Finance

Co-authors:

Dr Changxia Ke (QUT), Professor Lionel Page (UTS) and Professor William von Hippel (UQ)

Title:

(Over)confidence as a bargaining strategy

Abstract:

Even though agreement delays and impasses are costly in bargaining situations, they often occur in real life. Overconfidence has been identified as a main driver of conflicting resolutions and impasses in such context. In the shade of these costs, one can wonder why this bias persists. A growing body of evidence now shows that overconfidence can provide an advantage in social interactions. This paper investigates the causal effect of overconfidence on both efficiency and individual outcome in the context of a bilateral negotiation setting. To address this question, we conducted a controlled experiment based on a 3-stage bilateral negotiation in which we exogenously manipulate participants beliefs about their peformance. Results show that pairs of negotiators who both believe they are likely to have outperformed their partner suffer from costly delays as they need more time to reach an agreement. I also find some evidence that overconfidence increases the likelihood of agreement failure. In addition, we find that participants who are relatively more confident than their partner end up with larger earnings than their partners. The fact that overconfidence provides an advantage in a bilateral bargaining setting provides an explanation regarding the persistence of overconfidence in this context

 

Date
30 July 2019 - 30 July 2019
Time
12:00pm - 1:00pm
Location
Gardens Point Campus, Z Block, Level 8
Room
GP - Z808
Cost
Free to attend
Organisation
QUT School of Economics and Finance
Info
Yang Liu
Phone
07 3138 4016
Email
yang.liu@qut.edu.au
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