I really liked the post. I just wanted to add a reference that could be fun to read through. Some economists showed that overconfidence is logically totally reasonable even with so called rational actors.
I haven’t read this paper in awhile, however, the gist is basically, if you receive positive signals on your quality, Bayesian updating mechanically makes your estimates “over-confident”.
I really liked the post. I just wanted to add a reference that could be fun to read through. Some economists showed that overconfidence is logically totally reasonable even with so called rational actors.
https://www2.um.edu.uy/dubraj/documentos/apparentfinal.pdf
I haven’t read this paper in awhile, however, the gist is basically, if you receive positive signals on your quality, Bayesian updating mechanically makes your estimates “over-confident”.