Overconfident people are more exposed to “black swan” events: a case study of avalanche risk

SALDRU Repository

Show simple item record

dc.contributor.author Bonini, Nicolao
dc.contributor.author Pighin, Stefania
dc.contributor.author Rettore, Enrico
dc.contributor.author Savadori, Lucia
dc.contributor.author Schena, Federico
dc.contributor.author Tonini, Sara
dc.contributor.author Tosi, Paolo
dc.date.accessioned 2018-07-05T09:31:25Z
dc.date.available 2018-07-05T09:31:25Z
dc.date.issued 2018-06
dc.identifier.citation Bonini, N., Pighin, S., Rettore, E. et al. Empir Econ (2018). https://doi.org/10.1007/s00181-018-1489-5 en_US
dc.identifier.issn 1435-8921
dc.identifier.uri https://doi.org/10.1007/s00181-018-1489-5
dc.description.abstract Overconfidence is a well-established bias in which someone’s subjective confidence in their own judgment is systematically greater than their objective accuracy. There is abundant anecdotal evidence that overconfident people increase their exposure to risk. In this paper, we test whether overconfident backcountry skiers underestimate the probability of incurring a snow avalanche accident. An avalanche accident is a typical “black swan” event as defined by Taleb (The black swan: the impact of the highly improbable, Random House, New York, 2007) because it has a very low probability of occurring but with potentially dramatic consequences. To consider black swan events when studying overconfidence is particularly important, in light of previous findings on the role of overconfidence when feedbacks on tasks previously performed are inconclusive and infrequent. We run our test by measuring individual overconfidence using standard tools from the literature and then use a random effect logit model to measure its effect on the probability to take the ski route. We show that (1) overconfidence is widespread in our sample; (2) practitioners who are more prone to overestimate their knowledge are also more likely to take risks associated with a ski trip under the threat of avalanche danger, a result robust to a set of specification tests we perform. This suggests that overconfident people are more exposed to black swan events, by taking a risky decision that can bring about fatal consequences. en_US
dc.language.iso en en_US
dc.publisher Springer-Verlag GmbH Germany, part of Springer Nature 2018 en_US
dc.subject Cognitive bias en_US
dc.subject Risky decision en_US
dc.subject Backcountry skiing en_US
dc.subject Measurement errors en_US
dc.subject Logit model en_US
dc.title Overconfident people are more exposed to “black swan” events: a case study of avalanche risk en_US
dc.type Article en_US

Files in this item

This item appears in the following Collection(s)

Show simple item record

Search OpenSALDRU


My Account