How to counteract biased self-assessments? An experimental investigation of reactions to social information

Abstract

In a lab experiment, we investigate whether social information can improve the accuracy of self-assessments of relative performance. In particular, we compare the effectiveness of different types of social information: subjects either learn their close peers’ (i) average absolute performance, (ii) average self-assessment or (iii) average bias of self-assessments. Additionally, we explore the demand for the different types of social information. Our results suggest that social information can help debiasing subjects’ self-assessments, but not all types of information are equally effective. Only learning about the average bias of peers improves self-assessments. Subjects are, in general, willing to pay for social information but mostly prefer information about their peers’ absolute performance, which is not helpful. Nevertheless, self-selected information on peers’ average bias triggers a stronger reaction to the information.