The “hard-easy effect” is a well-known cognitive bias on self-confidence calibration that refers to a tendency to overestimate the probability of success in hard-perceived tasks, and to underestimate it in easy-perceived tasks. This paper provides a target-based foundation for this effect, and predicts its occurrence in the expected utility framework when utility functions are S-shaped and asymmetrically tailed. First, we introduce a definition of hard-perceived and easy-perceived task based on the mismatch between an uncertain target to meet and a suitably symmetric reference point. Second, switching from a target-based language to a utility-based language, we show how this maps to an equivalence between the hard-perceived target/gain seeking and the easy-perceived target/loss aversion. Third, we characterize the agent’s miscalibration in self-confidence. Finally, we derive sufficient conditions for the “hard-easy effect” and the “reversed hard-easy effect” to hold.

A target-based foundation for the “hard-easy effect” bias

TIBILETTI, Luisa
2014

Abstract

The “hard-easy effect” is a well-known cognitive bias on self-confidence calibration that refers to a tendency to overestimate the probability of success in hard-perceived tasks, and to underestimate it in easy-perceived tasks. This paper provides a target-based foundation for this effect, and predicts its occurrence in the expected utility framework when utility functions are S-shaped and asymmetrically tailed. First, we introduce a definition of hard-perceived and easy-perceived task based on the mismatch between an uncertain target to meet and a suitably symmetric reference point. Second, switching from a target-based language to a utility-based language, we show how this maps to an equivalence between the hard-perceived target/gain seeking and the easy-perceived target/loss aversion. Third, we characterize the agent’s miscalibration in self-confidence. Finally, we derive sufficient conditions for the “hard-easy effect” and the “reversed hard-easy effect” to hold.
23/2014
1
14
https://ideas.repec.org/s/vnm/wpdman.html
Hard-easy effect bias; Loss-gain asymmetry; Endowment effect bias; Escalation and de-escalation of commitment effect bias
Bordley Robert; LiCalzi Marco; Tibiletti Luisa
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2318/149445
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