Overconfidence bias and the gender effect : is there more than just gender?

Abstract

Overconfidence describes the tendency for people to overestimate their skills, expertise, and accuracy in their judgement and plays a key role in everyday decision-making processes. Several studies have documented that overconfidence is one of the most common biases in the business world and suggest a tendency for men to exhibit higher levels of overconfidence than women. However, in previous research, gender was taken as a given difference. This study set out to examine whether gender is a key predictor of the exhibit of overconfidence bias and explores the degree to which age and level of education influence the impact of the bias. For this, an online experiment was designed that provided quantitative data from 94 participants. This study identified that out of age, education, and gender, gender is the main predictor of overconfidence bias. The data suggests that women are more risk-averse when it comes to estimating one’s skills. In surprising contrast to that, the women who did show boldness in decision-making tended to overestimate their skills way more than their male counterparts. These findings imply the possibility that risk-prone decisions made by women could be led by stereotype threat or optimism rather than overconfidence. Evidence is presented that shows that the gender effect of women exhibiting higher levels of overconfidence than men expands with increasing age. This result supports the view that age influences the development of biases differently across genders.