Confidence is an essential personality trait with a positive impact in numerous contexts, such as subjective well-being (Taylor and Brown, 1988, 1994), professional success (Kanter, 2004), or mental health (Taylor, 1989). Overconfidence, on the other hand, is a psychological bias by definition, since it is an inaccurate judgment of one’s own abilities. Typical examples for this type of bias are overly optimistic beliefs in one’s professional abilities (Meyer et al., 2013) or physical fitness (Obling et al., 2015). This overly optimistic belief may be both absolute (i.e., individuals predict that their performance is better than it actually is) or relative (i.e., individuals predict that their performance is better than their peers’ when it actually is not). In the literature, the first type of overconfidence is referred to as overestimation and the latter as overplacement (Moore and Healy, 2008).

Overconfident beliefs appear to have positive consequences in some contexts, while they can be detrimental in others. Among other things, it has been suggested that overconfidence has positive psychological benefits, for example, on ambition, morale, and persistence (Pajares, 1996; Johnson and Fowler, 2011). Besides potential positive psychological benefits, overconfidence seems to help individuals in a social setting by convincing others that they have better skills or knowledge than they actually have (von Hippel and Trivers, 2011). Anderson et al. (2012) have shown empirically that individuals with high levels of overconfidence are perceived as more competent by their peers. This overstatement of one’s abilities could be an advantage in hiring decisions (Reuben et al., 2014).

Besides potential positive aspects, several empirical studies display the negative economic consequences of overconfidence. Camerer and Lovallo (1999), for example, have found that in a laboratory setting individuals tend to overestimate their chances of relative success and therefore excessively enter a competitive game. In a trading experiment, highly overconfident investors show less reaction to bad news, which results in lower profits for them compared to low overconfidence investors (Trinugroho and Sembel, 2011). Similarly, Barber and Odean (2001) have reported that overconfident investors reduce their net earnings by excessive trading; i.e., the expected gains from a trade do not exceed its transaction costs. Moreover, managerial overconfidence seems to explain investment distortion (Malmendier and Tate, 2005).

Despite the potential costs associated with overconfident beliefs in some settings, overconfident judgments are an integral part of various aspects of human decision making (De Bondt and Thaler, 1995). They are common in many professional fields such as investment banking (Stael von Holstein, 1972), economic negotiations (Neale and Bazerman, 1991), the law (Wagenaar and Keren, 1986), and even in clinical psychology (Oskamp, 1965). One typically observed pattern is that while both men and women are overconfident, men are more frequently prone to this bias than women (Lichtenstein et al., 1982; Lundeberg et al., 1994) and this seems to have important economic implications which will be discussed in the next subsection.

Barber and Odean (2001), for instance, have investigated the common stock investments of men and women separately. They have shown that men trade 45% more than women and this trading behavior actually reduces their earnings. They have concluded that this is likely due to greater overconfidence in men. Among other things, lower risk aversion in men can be attributed to higher overconfidence (Soll and Klayman, 2004). Furthermore, it has been shown in laboratory experiments that women are less likely to enter competition than men and lower levels of overconfidence are one explanation for this behavior (Niederle and Vesterlund, 2007; Reuben et al., 2012). It seems that women are disadvantaged in hiring decisions, because underconfident women may not appear as competent as their male peers (Reuben et al., 2014).

While the general tendency of men being more overconfident than women has been reported in several studies, less is known about the causes of this difference. This paper presents an experimental assessment of the extent to which this bias is driven by gender differences in confidence about one’s ability relative to same and opposite sex peers. Thereby, the paper extends the current literature (e.g., Dean and Ortoleva, 2015) on overconfidence by using gender-specific questions. This appears relevant from an economic perspective, as the composition of one’s potential competitors is important for individual decisions on whether to enter a competitive game (Datta Gupta et al., 2013). Beliefs about one’s self and the others have been shown to be important drivers for this decision (Camerer and Lovallo, 1999). Similar findings have been reported in evolutionary biology. In the course of human evolution, competition among men typically took place as direct and aggressive contests. Competition among women, by contrast, was typically more indirect and subtle (Stockley and Campbell, 2013). One potential explanation for these different types of behavior could be that the attractiveness of direct intra-gender competition is different for men and women, as they have different perceptions about their same-sex peers. Recent studies have applied evolutionary theory to explain decision-making patterns and this paper extends the literature to overconfidence. For example, it has been hypothesized that men, who face a higher sexual selection pressure than women (Trivers, 1972), should be more concerned about relative outcomes. Women, by contrast, should be more concerned about absolute outcomes, i.e., about resources for themselves and their offspring (Buss, 1989; Ermer et al., 2008). Following the predictions of this hypothesis, Schmidt et al. (2015) and Friedl et al. (2016) have shown that social comparison has a greater effect on men than on women in decision-making under risk and ambiguity.

In order to study gender differences in confidence about one’s ability relative to same and opposite sex peers, participants of this study first solved the 7-item Cognitive Reflection Test (CRT). Then they predicted their own (i), the other participants’ (ii), men’s (iii), and women’s (iv) number of correct answers in this task¹. It was found that men perform better than women on this particular task, a result that has been previously reported (Kahneman and Frederick, 2002; Frederick, 2005). Moreover, it was observed that both men and women overestimate their performance; yet no significant gender effects in overestimation were found. When gender-specific predictions were compared, it emerged that men think they perform significantly better than other men. The equality between women’s predictions about their own performance and their female peers cannot be rejected.

The main outcome of the study is that men think that they would perform significantly better on the 7-item CRT than their male peers, while women made comparable predictions about their own performance and their female peers. This gender-specific overplacement variable is significantly different between men and women with men overplacing their performance more than women.

A large body of literature in economics and psychology suggests that women, on average, are less confident and competitive than men (see Croson and Gneezy, 2009 for an overview). We contribute to this literature by uncovering gender differences in confidence about one’s performance relative to same and opposite sex peers. Previous research has indicated that social components in a choice situation have an impact on gender differences in confidence and competitive behavior. On the one hand, it has been shown that women are more confident in their group’s performance than in their own performance, while men are less confident in their group’s performance compared to their own (Healy and Pate, 2007). While this study indicates that predictions about one’s own and other’s performance might differ by gender in certain situations, it does not specifically assess whether differences in performance are due to gender distribution within the reference group. Therefore, it is not directly comparable to the present study, where each participant was specifically asked about her/his prediction about men’s and women’s performance separately. On the other hand, it has been shown that men’s decision to enter a tournament or a piece-rate pay scheme can depend on the co-participant’s gender (Datta Gupta et al., 2013). In that study, men competed less against other men than against women, when the gender information was made sufficiently salient. While this result appears to be out of line with our findings, which might be due to the task type or the transition from beliefs to actions, it shows that competitive behavior might have intra- and inter-gender-specific components. This is a finding that is also often reported in the context of evolutionary-biology, which we refer to in the next part of the discussion.

In the course of human evolution, competition among males typically took place as direct and aggressive contests. Competition among females, by contrast, often occurred more indirectly and subtly. One potential explanation for these different types of behavior could be that the attractiveness of direct intra-gender competition is different for men and women, as they have different perceptions about their same-sex peers. It may be suggested that confidence in one’s own abilities relative to one’s competitors is an important drive underlying this observation. The link between beliefs about relative skill and the decision to enter competition has been established by several economics experiments (Camerer and Lovallo, 1999). If men think that they perform better than their peers (other men), it potentially makes direct competitions attractive for them. If women, by contrast, think that their peers (other women) perform similarly to them, direct competition appears less attractive and competition might take place on a more subtle level.

It appears important, however, to stress the possibility of reversed causality. It might be that evolutionary differences in competitiveness as an attitude may affect confidence beliefs due to self-enhancement. Self-enhancement refers to the fact that individuals gain positive utility by comparing themselves with lower ranked peers (Wood and Taylor, 1991). In particular, due to evolutionary differences between the levels of male and female competitiveness, confidence beliefs may give them different utility levels. Falk and Knell (2004) developed a social comparison model that includes self-enhancement and self-improvement in the utility function. The model shows that people with higher abilities tend to compare themselves with people who also have high abilities. They also show that women have lower reference standards. This finding is in line with our results showing that women over-place themselves less than men.

Some words of caution are in order. First, this study is on predictions about others relative to one’s performance. In future studies whether the above outlined causal chain from beliefs about performance translates into actual competitive behavior should be addressed. Second, performance predictions for the CRT were studied. This is a special task that aims on impulsiveness of decision-making and to what extent our findings apply in a broader context deserves further investigation.⁶ Dreber et al. (2014), for example, have shown that the type of task matters with respect to gender differences in competitive behavior. Third, confidence and competition are social notions that develop via countless interactions in distinct contexts. Due to its specific research questions, the design of the current study does not involve any social interaction between participants. Yet, it may be the case that overconfident behavior can alter with human interaction or social motives. For example, Burks et al. (2013) have shown that overconfidence can be induced by the desire to send positive signals to others about one’s own skill. Therefore, attention needs to be paid to the role of social interaction and motives on overconfidence in future studies.

All authors listed, have made substantial, direct and intellectual contribution to the work, and approved it for publication.

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.