Overconfidence as an interpersonal strategy.

Summary Standard economic models assume that individuals collect and process information in a way that gives them a relatively accurate perception of reality. However, this assumption is often challenged. Evidence shows that individuals often form positive biases about themselves, which can have adverse economic consequences. This thesis aims to explain the persistence of overconfidence in social interactions by showing the existence of strategic benefits of overconfidence that outweigh its social cost.Using a series of laboratory experiments, this thesis shows that (i) overconfidence occurs primarily when it provides an advantage in social interactions (Chapter 2) and (ii) identifies situations in which overconfidence is likely to harm society (Chapters 3 and 4). This thesis contributes to the literature by improving our understanding of the situational determinants of overconfidence in social interactions and lays the groundwork for improving policies to prevent or limit negative effects.