Confidence and Overconfidence in Political Economy∗

This paper studies the role of overconfidence in political behavior. We posit a simple model of overconfidence in beliefs. The model predicts that overconfidence leads to ideological extremeness, increased voter turnout, and increased strength of partisan identification. Moreover, the model makes many nuanced predictions about the patterns of ideology in society, and over a person’s lifetime. We test these predictions using novel survey data that allows for the measurement of overconfidence, and find that the predicted relationships are statistically and substantively important. ∗We wish to thank Stephen Ansolabehere, Marc Meredith, Chris Tausanovitch, and Christopher Warshaw for sharing their data. The authors are indebted to Scott Ashworth, Ethan Bueno de Mesquita, John Bullock, Antonio Merlo, Matthew Rabin, Holger Sieg, Mike Ting, and Leeat Yariv for useful discussions. We also thank seminar participants at Chicago’s Harris School, Harvard, the University of Maryland, and the University of Pennsylvania for thoughtful feedback.