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.
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Chen et al. (2025) studied this question.
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