On the Evolution of Overcon dence and Entrepreneurs
نویسندگان
چکیده
This paper explains why seemingly irrational overcondent behavior can persist. Information aggregation is poor in groups in which most individuals herd. By ignoring the herd, the actions of overcondent individuals (“entrepreneurs”) convey their private information. However, entrepreneurs make mistakes and thus die more frequently. The socially optimal proportion of entrepreneurs trades off the positive information externality against high attrition rates of entrepreneurs, and depends on the size of the group, on the degree of overcondence, and on the accuracy of individuals’ private information. The stationary distribution trades off the tness of the group against the tness of overcondent individuals.
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