Overconfidence in Decision Making Through the Lens of Gender Gap

Overconfidence in Decision Making Through the Lens of Gender Gap

Keriman Hande Ersöz Keleş
DOI: 10.4018/979-8-3693-1766-2.ch010
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This chapter elaborately explores the intricate landscape of decision-making, overconfidence, and gender disparities. Beginning with an insightful introduction to cognitive biases and their role in human judgment, the narrative later delves into gender differences in overconfidence. It unveils disparities in career trajectories, from educational choices to workplace dynamics. The author proposes debiasing strategies for equal opportunities by navigating the intricacies of altering human behavior and environmental factors. Through a multidisciplinary lens, combining insights from psychology and economics, the author calls to action for evidence-based interventions, emphasizing cautious alterations to systems for an unbiased, inclusive future.
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Women In The Workplace: Employment, Advancement, And Reward

The setbacks in women's career advancement are underpinned by intricate sociological, psychological, and evolutionary layers with a tail of long history attached to it. In her pivotal work, Claudia Goldin has uncovered the true nature of women’s employment throughout a 200-year period. Married women at work showed a U-shaped curve starting with a high employment rate working in agriculture or family-owned home-based small textile shops while taking care of children at the same. During the transition to the industrialization era, the employment rates of married women experienced a substantial decline due to incongruities between the demands of the new working environment and the constraints imposed by childcare responsibilities. At the beginning of the 20th century with the catalyzer impact of technology, further propelled by rising education levels and growing demand for the service sector, women once again started to increase their participation rate in the labor market. The introduction of the contraceptive pill not only facilitated family planning for women but also afforded them the agency to pursue higher education and make informed decisions regarding their career paths (Nobel Prize Outreach AB, 2023). Despite the increased participation rate in the labor market women of modern times were once again disproportionately affected by the waves of unemployment during and after the COVID era. Global unemployment parity was at its lowest point in 2022 with 63% slightly recovering to 64% in 2023 but still below pre-COVID levels (World Economic Forum, 2023). Closing the gender gap in labor participation is not only a moral imperative and a key objective of the United Nations' 2030 Sustainable Development Goals but is also projected to enhance the global GDP by 5.3 trillion dollars and boost tax revenue by 1.4 trillion dollars (Yoon & Addati, 2017).

A fundamental pillar in the ongoing pursuit of gender equality in the realm of economic progress lies in the equitable representation of women in senior leadership positions. Unfortunately, this domain is also significantly impaired, with only 32% of all leadership positions being held by women (Grant Thornton, 2023). Delving deeper into organizational structures, the corporate pipeline consistently reveals a decline in promotions targeting women; at the entry level, women constitute 48% of the workforce, but this percentage diminishes to 28% as progressing toward the end of the pipeline (McKinsey, 2023).

Key Terms in this Chapter

Nudge: A nudge is a small intervention in the decision-making process for better and predictable direction. Conditions should undergo minimal changes, allowing for flexibility in choices and avoiding the need for costly incentives ( Thaler & Sunstein, 2008 ).

Overconfidence: It is a cognitive bias defined as miscalibration between one’s ability and confidence ( Skala, 2008 ). Throughout the literature, 3 primary methods of measurement to overconfidence exist: overestimation (performance compared to belief), overplacement (performance relative to others), and overprecision (foreseeing extreme accuracy) ( Moore & Healy, 2008 ).

Gender Gap: Disparity between men and women in various aspects of human life. Key indicators are mainly grouped in 4 areas; economic participation and opportunity, educational attainment, health and survival, and political empowerment ( World Economic Forum, 2023 ).

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