When it comes to learning, what’s better: The carrot or the stick?

Does the potential to win or lose money influence the confidence one has in one’s own decisions? Researchers investigated confidence bias in a learning context through a system of monetary punishment and reward. They demonstrated that we become more confident in our choices when learning to seek rewards. However, this confidence evolves into over-confidence. Moreover, the monetary gains makes us less flexible, while the fear of losing money preserves our ability to adapt.

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