An explanation of the Dunning–Kruger effect is provided which does not require any psychological explanation, because it is derived as a statistical artifact. This is achieved by specifying a simple statistical model which explicitly takes the (random) boundary constraints into account. The model fits the data almost perfectly. JEL Classification: A22; C24; C91; D84; D91; I21
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We are grateful to two referees and to the editor for their positive and constructive comments.
Copyright © 2022 Magnus and Peresetsky.
- boundary conditions
- conditional expectation
- Dunning–Kruger effect
- tobit model
- underestimation and overestimation