Cocky kids: The four-year-olds with the same overconfidence as risk-taking bankers

The biggest risk most people have when it come to building wealth is putting all their eggs in one basket.Having one full-time job supplying you with 100% of your income means you are either doing well or in a crisis.

The research also found that girls were more successful than boys at a card game in the study thanks to a more low-risk strategy but also experienced greater swings between overconfidence and lack of confidence in their abilities.

Dr Dominik Piehlmaier, Lecturer in Marketing at the University of Sussex Business School and the study’s author, said: “Much of our knowledge on judgment and decision-making is based on adult participants but there is no reason to believe that humans only develop such an omnipresent cognitive illusion once we reach adulthood.

In the study, children were asked to play a card game known as the Children’s Gambling Task where they choose cards from one of two packs.

The card is then turned over to reveal how many stickers the participant has won and lost. One pack had cards with significantly higher wins and losses than the other.

At intervals, children had to decide whether they thought they would win more, about the same, or fewer stickers than previously in the game.

Each participant started off with four stickers after the initial six practice trials. On average, every participant gained 0.3 stickers per turn and left the game with an average of 6.67 stickers, ranging from zero to 33.

The study showed that more than 70% of four-year-olds and half of all five and six-year-olds were overconfident in their expectations after playing ten turns and six practice trials.

Overconfidence is widely seen as a male trait but the study also had interesting findings when it came to the general performance of boys and girls.

In general, girls outperformed boys by an average of 2.87 stickers thanks to a less high-risk strategy of choosing relatively more safe cards which offered smaller but more sustainable gains.

“By the end of the experiment, there were relatively more overconfident girls than boys; a finding that contradicts previous reports regarding more calibrated girls in metamemory tasks.”

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