Overconfidence Bias

What is it?

Overconfidence bias is one of the most studied cognitive biases and takes three forms: overestimation (thinking we perform better than we do), overplacement (thinking we're better than others), and overprecision (excessive certainty in our beliefs). Many people rate themselves above average on desirable traits, in numbers too high for all of them to be right. Professionals are not immune: overconfidence has been documented among doctors, lawyers, and executives. Entrepreneurs often show high confidence in their own venture's odds, which may help explain both why they start businesses and why many fail. In calibration studies, answers people say they are 90% sure of turn out to be right noticeably less often than that. The bias resists feedback partly because we tend to explain failures as bad luck and successes as skill. Overconfidence leads to inadequate preparation, poor risk assessment, thin contingency plans, and the illusion that complex problems have simple solutions. Calibrating confidence requires tracking predictions over time and deliberately considering scenarios where you could be wrong.