Document Type
Article
Publication Date
2-3-2020
Publication Title
Quantitative Economics
Abstract
Combining weekly productivity data with weekly productivity beliefs for a large sample of truckers over 2 years, we show that workers tend to systematically and persistently overpredict their productivity. If workers are overconfident about their own productivity at the current firm relative to their outside option, they should be less likely to quit. Empirically, all else equal, having higher productivity beliefs is associated with an employee being less likely to quit. To study the implications of overconfidence for worker welfare and firm profits, we estimate a structural learning model with biased beliefs that accounts for many key features of the data. While worker overconfidence moderately decreases worker welfare, it also substantially increases firm profits.
Volume
11
First Page
315
Last Page
348
DOI
https://doi.org/10.3982/QE834
ISSN
1759-7331
Rights
Copyright © 2020 The Authors.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.
Recommended Citation
Hoffman, Mitchell and Stephen V. Burks. “Worker Overconfidence: Field Evidence and Implications for Employee Turnover and Firm Profits.” Quantitative Economics 11 (2020): 315-348.
Primo Type
Article