Self-Confidence and Personal Motivation

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…