Can wishful thinking explain evidence for overconfidence? An experiment on belief updating.

This article investigates whether wishful thinking—optimism about outcomes unrelated to one's own performance—can explain the better-than-average effect, traditionally attributed to overconfidence, where individuals believe they are better than average. Using an experimental design that removes any performance or ability component by having participants update beliefs about the source of randomly drawn cheerios from boxes with known compositions, the study tests whether deviations from Bayesian updating arise from wishful thinking rather than overconfidence. Results show that among the most optimistic subjects, belief patterns inconsistent with Bayesian rationality may reflect wishful thinking, while overall subjects tend to update beliefs more conservatively than Bayesian theory predicts. The findings suggest that some previously identified overconfidence in ability-related tasks might partly stem from wishful thinking, and that conservatism in belief updating could lead to underestimation of both overconfidence and underconfidence.