Does Supplementing Outcome Feedback with Performance Feedback Improve Probability Judgments?

Abstract

This study examines the effect of feedback on calibration of auditors’ probability judgment. Results from our experiment indicate that auditors’ probability judgments are indeed poorly calibrated and auditors are in general overconfident. In addition, we investigate whether we can use feedback as a means to improve judgment quality. Our evidence indicates that outcome feedback, in spite of its simplicity, is effective in reducing overconfidence. Moreover, we find supplementing outcome feedback with performance feedback does not have any added benefits. Sometimes, it actually decreases judgment performance.