Confidence and Communication: Too much air time for some? (JMP)

Abstract

Beliefs about one’s own relative skill matter for many economic decisions. Yet, little is known about how these beliefs affect communication, especially the decision to talk - instead of letting other people do the talking. I use a laboratory experiment to investigate whether overconfidence leads to less successful conversations. In a communication game with aligned incentives, two senders try to inform a receiver. The accuracy of each sender’s information depends on her relative skill, such that the more skillful sender should do the talking. Senders who overestimate their skill may fail to be informative. A treatment variation creates an exogenous shock to the senders’ confidence level. The results confirm that increased confidence translates into a larger frequency of talking. The conversation, however, does not become less informative, as the participants solve their coordination problem with higher precision: in the treatment with upward shift in confidence, they coordinate better who should talk and who should stay silent.