Ability, Self-Confidence, and Search

Abstract

We explore optimal search for individual improvement when agents start with different confidence in their own ability. The initial self-confidence may be determined by nature or socioeconomic factors. Presuming Bayesian learning, we show that final achievements depend positively on initial confidence. When parents achievements affect childrens self-confidence, a meritocracy, not necessarily founded on ability, may emerge. Social differences may thus stem from – and maintain – unjustifiable opinions about ability differentials.