The Evolution of Overconfidence and Grade Expectations: An Observational Study
Belayet Hossain and Panagiotis Tsigaris
Thompson Rivers University, Canada
Volume 10: 2015, pp. 117-136; ABSTRACT
This study examines how grade expectations are formed by two groups of students as they progressively attempt to forecast their final grade. Students who do not make significant forecast errors during the term are classified as “good” forecasters. The other group contains students who are “poor” forecasters of their final grade. Both groups initially are overconfident and overestimate their final grade. However, as more information becomes available about their actual performance, overconfidence falls. It is found that both groups of students initially put more weight on their initial beliefs than on their objective expectations. Students use adaptive expectation as a mechanism to form these beliefs. They adapt to previous forecast errors, gradually adjusting their expectations. The poor forecasters continue to display adaptive expectations even after writing the final exam, but prior to receiving their final grade. They continue to anchor their beliefs in their initial expectations even after writing the final exam. On the other hand, the good forecasters eventually move from adaptive to rationally formed expectations.
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