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<p>We analyze how overconfidence affects behavior in multistage elimination contests. Our findings reveal a nuanced interplay between overconfidence and effort exertion. An overconfident player exerts less effort in the final stage than a rational rival. However, this pattern can be inverted in the semifinals stage, where an overconfident player can exert more effort than a rational rival. We also uncover that an overconfident player can have the highest probability of winning an elimination contest. Our results offer a novel perspective on CEO overconfidence and highlight that high executive compensation renders the pursuit of CEO positions exceptionally appealing to overconfident managers.</p>

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Overconfidence and strategic behavior in elimination contests: implications for CEO selection

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年4月30日

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  • Yuxi Chen,
  • Luís Santos-Pinto

摘要

We analyze how overconfidence affects behavior in multistage elimination contests. Our findings reveal a nuanced interplay between overconfidence and effort exertion. An overconfident player exerts less effort in the final stage than a rational rival. However, this pattern can be inverted in the semifinals stage, where an overconfident player can exert more effort than a rational rival. We also uncover that an overconfident player can have the highest probability of winning an elimination contest. Our results offer a novel perspective on CEO overconfidence and highlight that high executive compensation renders the pursuit of CEO positions exceptionally appealing to overconfident managers.