Overconfidence bias
Overconfidence bias is the tendency to overestimate the accuracy of one's own judgements.
Most people believe they are above-average drivers, which is statistically impossible. Overconfidence bias is the gap between how good we think we are and how good we are.
Overconfidence bias is the tendency to overestimate the accuracy of one's own judgements, knowledge, or abilities. People are systematically more certain than they have any right to be, and the gap between confidence and accuracy is wide, persistent, and consequential.
Three faces of overconfidence
The bias takes several forms. Overestimation is thinking you are better, faster, or more capable than you are. Overplacement is rating yourself above others, the better-than-average effect that has most people placing themselves in the top half. Overprecision is being too sure your estimates are right, setting confidence intervals far too narrow. The third is especially insidious, because it makes people dismiss the possibility that they are wrong.
Where it does damage
Overconfidence drives a remarkable amount of costly behaviour. It leads entrepreneurs to start ventures with little chance of success, executives to overpay for acquisitions sure they can capture synergies others missed, investors to trade too much, and project planners to promise timelines and budgets they routinely blow, the planning fallacy. Because the confident are persuasive, overconfidence also spreads, rewarded socially even as it misleads.
Hard to cure, possible to manage
Overconfidence resists correction, partly because feedback in many domains is slow, noisy, or absent, so people rarely learn how wrong they were. The defences are structural: seeking disconfirming views, keeping records to compare predictions with outcomes, using the outside view by looking at how similar past efforts actually fared, and building in margins for the errors you are sure you will not make. Forecasting with explicit probabilities, and being scored on them, is one of the few things that genuinely tempers it.
Overconfidence bias is in some ways the most dangerous bias, because it is the one that stops people from suspecting they hold any. A degree of confidence is necessary to act at all, but the systematic excess of it, unexamined, is behind a large share of the avoidable disasters in business and beyond.