Confidence and Information Usage: Evidence from a Bankruptcy Prediction Task.

The subject of confidence in judgment tasks has been discussed extensively in the experimental psychology literature, but little is known about the prevalence of overconfidence in tasks involving the selection and processing of information, an issue of fundamental concern to accountants. The current research employs a bankruptcy prediction task to investigate the effect of information choice on confidence, and factors that may cause unjustified confidence in judgments to occur. The results tend to support existing behavioral theories of confidence. However, support is generally conditional on the level of task predictability. In addition, information usage is highly related to confidence in a non-linear fashion, and there exists a negative correlation between overconfidence and information usage.