Self-Confidence and Personal Motivation

Abstract

We analyze the value placed by rational agents on self-con dence, and the strategies employed in its pursuit. Con dence in one's abilities generally enhances motivation, making it a valuable asset for individuals with imperfect willpower. This demand for self-serving beliefs (which can also arise from hedonic or signaling motives) must be weighed against the risks of overcon dence. On the supply side, we develop a model of self-deception through endogenous memory that reconciles the motivated and rational features of human cognition. The resulting intrapersonal game of strategic communication typically leads to multiple equilibria. While "positive thinking" can improve welfare, it can also be self-defeating (and nonetheless pursued).Believe what is in the line of your needs, for only by such belief is the need ful lled . . . Have faith that you can successfully make it, and your feet are nerved to its accomplishment [William James, Principles of Psychology].I have done this, says my memory. I cannot have done that, says my pride, remaining inexorable. Finally-memory yields [Friedrich Nietzsche, Beyond Good and Evil].I had during many years followed the Golden Rule, namely, that whenever a published fact, a new observation or thought came across me, which was opposed to my general results, to make a memorandum of it without fail and at once; for I had found by experience that such (contrary and thus unwelcome) facts and thoughts were far more apt to escape from memory than favorable ones [Charles Darwin in The Life of Charles Darwin, by Francis Darwin]. INTRODUCTIONThe maintenance and enhancement of self-esteem has always been identi ed as a fundamental human impulse. Philosophers, writers, educators, and of course psychologists all have emphasized the crucial role played by self-image in motivation, affect, and social interactions. The aim of this paper is to bring * This paper was previously titled "Self-Con dence: Intrapersonal Strategies [1999]." For helpful comments and discussion we are grateful to Dilip Abreu, Olivier Blanchard, Isabelle Brocas, Edward Glaeser, Daniel Gilbert, Ian Jewitt, David Laibson, George Loewenstein, Andrew Postlewaite, Marek Pycia, Matthew Rabin, Julio Rotemberg, and three anonymous referees. We also thank conference and seminar participants at the University of Chicago, Columbia University, Cornell University, the Massachusetts Institute of Technology, the National Bureau of Economic Research, Northwestern University, New York University, the Oxford Young Economists' Conference at Oxford University, the University of Pennsylvania, Princeton University, Stanford University, and Yale University. Bénabou gratefully acknowledges nancial support from the National Science Foundation (SES-0096431). 871 these concerns into the realm of economic analysis, and show that this has important implications for how agents process information and make decisions. Conversely, the tools of economic modeling can help shed light on a number of apparently irrational behaviors documented by psychologists...

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