Imposing Commitment to Rein in Overconfidence in Learning
Fernandez, M., Mayskaya, T. & Nikandrova, A. 
ORCID: 0000-0003-0131-4303 (2024).
Imposing Commitment to Rein in Overconfidence in Learning.
Games and Economic Behavior, 144,
pp. 29-48.
doi: 10.1016/j.geb.2024.01.001
Abstract
A rational principal delegates learning to an overconfident agent who overestimates the precision of the information he collects. The principal chooses between two contracts: commitment, in which the agent commits to the duration of learning in advance, and flexible, in which the agent decides when to stop learning in real time. When the agent is sufficiently overconfident, the principal optimally ties the agent's hands by offering him the commitment contract. When the principal can choose both the contract and the agent's level of overconfidence, selecting the rational agent is suboptimal when the cost of learning is sufficiently high.
| Publication Type: | Article |
|---|---|
| Additional Information: | © 2024 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). |
| Publisher Keywords: | Learning, Delegation, Overconfidence, Misspecified model, Brownian motion |
| Subjects: | H Social Sciences > HB Economic Theory |
| Departments: | School of Policy & Global Affairs School of Policy & Global Affairs > Economics |
| SWORD Depositor: |
Available under License Creative Commons Attribution Non-commercial No Derivatives.
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