Imagine a world where people lacked confidence. We would scarcely be able to face a new day, struggling to call the courage to show our work to our bosses or apply for a new job. Surgeons would be racked with doubt about upcoming operations. Military commanders would hesitate at key moments when decisiveness was essential. Politicians would be unable to defend their views against the constant hail of personal and intellectual criticism.
Confidence is so vital even for the mundane activities of everyday life that we take it for granted. But it also looms large when we try to explain achievements that are out of the ordinary. Confidence is widely held to be an almost magic ingredient of success in sports, entertainment, business, the stock market, combat and many other domains.
At the same time, confidence can be dangerous. Like fire, it can be extremely useful in controlled amounts, but confidence in excess—overconfidence—can easily burn out of control and cause costly decision-making errors, policy failures, and wars.
We may be surprised by the recurring problem of overconfidence—why don’t people learn from their mistakes? As the archetypal self-doubter Woody Allen suggested, “Confidence is what you have before you understand the problem.” But the recurrence of overconfidence is no surprise to psychologists.
All mentally healthy people tend to have so-called “positive illusions” about our abilities, our control over events, and our vulnerability to risk. Numerous studies have shown that we overrate our intelligence, attractiveness, and skill. We also think we have better morals, health, and leadership abilities than others. A survey of 1 million high school students showed that 70 percent think they are above-average leaders (only 2 percent rated themselves below average). In another study 94 percent of college professors claimed that their research was above average. We believe we will live longer than others, and we will avoid common calamities like car accidents, crime, earthquakes, and major illness. Like the children in Garrison Keillor’s Lake Wobegon, we are all above average.
Positive illusions appear to be undergirded by many different cognitive and motivational biases, all of which converge to boost people’s confidence. This is dangerous because people are more likely to think they are better than others, which makes aggression, conflict, and even war more likely. As psychologist Daniel Kahneman put it: “The bottom line is that all the biases in judgment that have been identified in the last 15 years tend to bias decision-making toward the hawkish side.”
Confidence thus poses a major puzzle. On the one hand, overconfidence appears to be a widespread and powerful feature of human cognition, but on the other hand it appears to cause faulty assessments and major disasters. That makes little sense. Why would this kind of false belief survive in competition with accurate beliefs? How could it even have evolved in the first place?
The beginnings of a solution suggest themselves at the point where we started, with the good things that confidence brings. As Michael Jordan said, “You have to expect things of yourself before you can do them.” If confidence allows us to set expectations, then overconfidence might work as a kind of self-fulfilling prophecy, helping us to achieve even more. Consider the fantastically self-confident Muhammad Ali, who said he “never even thought of losing” and even at school “boasted weekly—if not daily—that one day I was going to be the heavy weight champion of the world…. When I proclaimed that I was the Greatest of all Time, I believed in myself. And I still do.”
Overconfidence may therefore be advantageous because it increases ambition, resolve, and persistence in many of life’s tasks—even if the price of maintaining this overconfidence is occasional disasters. Just as successful poker players must sometimes bluff the strength of their hand if they are to win, overconfident individuals may be able to outperform their rivals if they believe in themselves enough to keep going when others would give in.
The idea that overconfidence is advantageous is interesting. But it has remained just that—an idea. There always lurks a compelling alternative hypothesis: While overconfidence might indeed encourage us to aim high, it is nevertheless a decision-making error. Consequently, many economists argue that the winning strategy ought to be one that sees the world exactly as it is, coldly calculating our capabilities and picking only fights that we are sure to win. This Homo economicus model still dominates economics and other corners of the social sciences.
How can we adjudicate between these two alternative views? An evolutionary perspective is useful here because it forces us to think through how these alternative strategies would fare in direct competition with each other—which ones would survive Darwin’s mill of natural selection? Imagine a world in which there are three types of individuals: economists (who are unbiased), Muhammad Alis (who are overconfident—okay, he was the greatest, but it’s a good label), and Woody Allens (who are under confident). If these guys are competing for food, the Woody Allens will shy away from conflict, which helps them avoid costly confrontations. But it also means they might starve. The economists will have a better idea about which conflicts they can win, and so they won’t be quite so scrawny. But uncertainty about the outcome of any one conflict means they will occasionally leave food on the table that they could have claimed and won. In contrast, the Muhammad Alis of the world rarely back down from a fight, and therefore they always have a shot at eating and surviving. As long as the value of eating is sufficiently greater than the cost of conflict, the Muhammad Alis will win the day.
Hence, a degree of overconfidence can be beneficial on average, even if it causes occasional disasters. As long as the prize at stake sufficiently exceeds the cost of competing for it, fortune favors the bold.
Overconfidence is an increasingly dangerous strategy today. The modern world is very different from the one in which we evolved, and to which our decision making and behaviors adapted via natural selection. The big decisions of today are dependent on multiple and complex interacting bureaucracies and stakeholders, in which accurate assessments and painstaking planning may be boring but are critical to success—an evolutionary novelty we are not “designed” for. Political and economic overconfidence are therefore all the more important because they are more likely to be misplaced and yet also to have implications for millions. We may not be able to eliminate this bias in our decision-making, but it is crucial that we understand it and reset our institutions accordingly if we are to shake our long record of self-imposed disasters.
You may be overconfident if :
- You believe you’re the smartest person in the room.
- You haven’t been to training in months or years.
- You’re surprised when others don’t realize your greatness.
- You think the things you do are more important than the things others do.
- You jump into the spotlight and seldom share it.
- You seldom if ever change your mind.
- You don’t have a coach, mentor, or other trusted advisor.
- You don’t adequately consider or plan for failure.
- You believe your personality type is superior to others.
- You think you’re a performer but mostly you’re a talker.
- Bonus: You make excuses when a fault or failure is pointed out.