What Do Kids, Bankers, and World Leaders Have in Common?
New research shows that children are overconfident in their future performance.
Posted Apr 28, 2020
These days parents spend a lot of time playing card games with their kids to practice social distancing and observe stay-at-home orders. Have you ever wondered whether children are excessively confident in their future performance when playing with you? If so, would their unreasonable expectations decrease with learning and feedback? Also, does it depend on whether you play with a girl or a boy?
A recently published article in Scientific Reports tries to answer these questions by playing a grand total of more than 3,400 turns of an experimental card game with preschoolers and kindergartners (Kerr and Zelazo, 2004). The results suggest that overconfidence is widespread and surprisingly persistent in children aged four to six. More than 70% of four-year-olds and half of all five and six-year-olds were overconfident in their expectations after playing ten turns and six practice trials.
The observed omnipresence mirrors findings from studies looking at overconfidence in bankers, CEOs, and other high-stakes decision-makers (e.g., Johnson, 2009; Glaser et al., 2005; Ho et al., 2016). Notably, participating children played more than 60 turns and saw their payoff balance rise and fall, yet every third child still thought that they could do better than they had done in the previous 50 turns. This indicates that even a vast number of repetitions, learning, and feedback did not diminish the misplaced confidence in their success of one out of three participants.
Lastly, the study provides evidence of an early-age gender effect. Specifically, girls outperformed boys as they adopted a more risk-averse and, ultimately, more successful strategy to win stickers that were used to incentive realistic behavior. However, by the end of the experiment, girls were notably more overconfident in their future performance compared to boys.
How is that possible? On average, female participants seemed to closely align their estimates with their current performance. In other words, they heavily discounted information from the more distant past. The results suggest that girls overestimated their abilities if they had a winning streak and underestimated themselves whenever they lost a few times in a row. Boys, on the other hand, seemed to follow a negative trend line that indicates slow but steady learning on what might be considered “reasonable expectations.” A gender effect in early childhood has never been consistently shown in prior studies on overconfidence.
Arguably, the findings can only provide initial empirical evidence, and more data are needed to draw any sort of final conclusion. Nevertheless, the article closes a gap in the existing literature on overconfidence by focusing on young decision-makers. Much of our knowledge of judgment and decision-making is based on adult participants, but there is no reason to believe that humans only develop such an omnipresent cognitive illusion once we reach adulthood. The study demonstrated that high levels of confidence in one’s own abilities – a trait common among high achievers – is apparent from an extremely early age. Ultimately, this may suggest that cocky adults developed their overconfident tendencies from infancy rather than later life.
You can read the full article, “Overconfidence Among Young Decision-Makers,” here.
Glaser, M., Langer, T., & Weber, M. (2005). Overconfidence of professionals and lay men: Individual differences within and between tasks?.
Ho, P. H., Huang, C. W., Lin, C. Y., & Yen, J. F. (2016). CEO overconfidence and financial crisis: Evidence from bank lending and leverage. Journal of Financial Economics, 120(1), 194-209.
Johnson, D. D. (2009). Overconfidence and war. Harvard University Press.
Kerr, A., & Zelazo, P. D. (2004). Development of “hot” executive function: The children’s gambling task. Brain and cognition, 55(1), 148-157.
Piehlmaier, D. M. (2020). Overconfidence Among Young Decision-Makers: Assessing the Effectiveness of a Video Intervention and the Role of Gender, Age, Feedback, and Repetition. Scientific reports, 10(1), 1-10.