TY  - RPRT
        AU  - Huffman, David B.
AU  - Raymond, Collin
AU  - Shvets, Julia
        TI  - Persistent Overconfidence and Biased Memory: Evidence from Managers
        PY  - 2023/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 16283
        UR  - https://www.iza.org/publications/dp16283
        AB  - A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods we find that: (i) managers make overconfident predictions about future performance; (ii) managers have overly-positive memories of past performance; (iii) the two phenomena are linked at an individual level. Our results are consistent with models of motivated beliefs in which individuals are motivated to distort memories of feedback and preserve unrealistic expectations.
        KW  - tournament
KW  - memory
KW  - overconfidence
KW  - motivated beliefs
        ER  -