Overconfidence over the lifespan: Evidence from Germany

This paper investigates if and how overconfidence at the individual level changes over the course of a life. We provide age profiles of a novel continuous overconfidence measure and the probability of being overconfident, conditioning on personality traits (including the Big 5 and optimism), economic preferences, cognitive ability, and the individual's socio-economic status. Our empirical work relies on representative panel data sets from Germany, and individuals' both self-assessed and actual percentile in the monthly gross wage distribution are incorporated in our measure of overconfidence. We find that both the level of relative placement and the over-placement probability increase with age up to one's fifties.