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Keynes Fund


Summary of Project Results


We analyse data on managers in a large chain of food and drink stores in order to shed light on some fundamental questions about human behaviour.

In this firm, managers face a high-powered tournament incentive scheme, which provides a rich research opportunity.  Somewhat uniquely, we are able to combine observational data on managerial performance at the firm with the data on characteristics and behaviours of these managers we collected through laboratory experiments with them.


Project Output

Persistent Overconfidence and Biased Memory: Evidence from Managers. Huffman, David, Collin Raymond, and Julia Shvets (2022) American Economic Review, 112 (10): 3141-75 (lead paper in the journal)

Abstract: A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods we find that: (i) managers make overconfident predictions about future performance; (ii) managers have overly-positive memories of past performance; (iii) the two phenomena are linked at an individual level. Our results are consistent with models of motivated beliefs in which individuals are motivated to distort memories of feedback and preserve unrealistic expectations.

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Incentives and rank concerns in managerial tournaments. Shvets (2017)

Abstract: Many firms use relative performance pay in which they rank employees. In such a setting, an employee's actions may not only be shaped by incentives but also by concerns about their rank. In this paper, we study incentive and rank effects faced by store managers in a large firm where bonus is determined through a high powered tournament. We study managers' response to performance feedback, using the rules of the tournament to separate the impact of incentives from that of rank. On the margin, we find that managers ignore incentives, but respond to rank. Their response suggests desire to catch up: when managers get a bad rank on either profit or service, they respond by improving performance. Furthermore, we show that managers achieve these improvements by making corresponding changes to labour variables, their main levers of control.


Podcast "How to Change Your Mind" (Episode 379)

"How to change your mind?" is the question posed to several scientists in this recent Freakonomics broadcast. Among them is Julia Shvets, discussing her research on overconfidence, done jointly with David Huffman and Collin Raymond and funded by the Keynes Fund.

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Podcast The Visible Hand "Overconfident Managers" 

The Visible Hand is a podcast about organisations, economics, and management. The paper discussed in this episode is: Persistent Overconfidence and Biased Memory: Evidence from Managers, by David Huffman, Collin Raymond, and Julia Shvets.

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Podcast Hear this Idea "Julia Shvets on Overconfidence, Rank Incentives, and Lab vs Field Experiments" 

Hear this Idea is a podcast showcasing new thinking in philosophy, the social sciences, and effective altruism. In each (≈90 minute) conversation, they ask thinkers, founders, and academics to explain their field and their work. The paper discussed in this episode is: Persistent Overconfidence and Biased Memory: Evidence from Managers, by David Huffman, Collin Raymond, and Julia Shvets and is based on Julia Shvet’s research funded by The Keynes Fund.

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Dr. Julia Shvets


Dr Julia Shvets is an Economist at the University of Cambridge, Christ's College. Her research interests focus on Microeconomics, Behavioural Economics and Economics of Organizations.


Dr. David Huffman


Dr David Huffman is a Full Professor of Economics at the Department of Economics, University of Pittsburgh. His research interests focus the areas of Behavioral Economics and Labor Economics.


Dr Collin B Raymond


Dr Collin B Raymond is an Associate Professor of Strategy and Business Economics at Cornell University.





Cambridge Working Papers in Economics (CWPE)



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