Overconfidence And Preferences For Competition
Working Paper 21695
DOI 10.3386/w21695
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We study whether and when preferences for competition are a positive economic trait among high-earners and to what extent this trait can explain the gender gap in income among MBAs. Consistent with the experimental evidence, preferences for competition are a positive economic trait only for non-overconfident individuals. Preferences for competition correlate with income only at graduation when bonuses are guaranteed and not a function of performance. Overconfident, competition loving MBAs have lower compensation and income growth, and experience greater exit from high-reward industries and more frequent job interruptions. Preferences for competition do not explain the gender pay gap among MBAs.