Why You’re Hardwired For Overconfidence And What To Do About It

Overconfidence makes risky decisions feel easier to make, even while it increases their actual riskiness.

Why You’re Hardwired For Overconfidence And What To Do About It
[Photo: Flickr user BatCam Photography]

Confidence can be a slippery thing. It’s a good and necessary characteristic for success, but in overabundance, it can devolve into recklessness and poor decision-making. Life has a way of teaching us (often the hard way) where that line falls. The bigger question–one that science can help answer–is why crossing it unawares seems to be so perilously easy to do.


The Alarming Ease Of Growing Overconfident

Despite the fact that, according to Gallup, 50% of all businesses fail within the first five years, one study found that new business owners vastly overestimate the probability that their businesses will prosper. A sizable majority of entrepreneurs surveyed said there was a 70% chance or better of survival, with one-third of respondents stating they were 100% confident that their companies would succeed.

According to the U.S. Census Bureau, nearly half of all marriages end in divorce. Yet when a researcher at Harvard Law School analyzed why so few people use prenuptial agreements to hedge their bets, she found that one of the main reasons was that most people simply didn’t imagine their marriages would ever disintegrate.

Call it naiveté or optimism if you like. But the evidence suggests that overconfidence causes people to have inflated views of their competence. For example, in a well-known College Board survey in 1976, only 2% of high school students said they believed their abilities were average, while 70% believed they ranked above average. Most revealing of all, a whopping 25% said they were in the top 1% when it came to their ability to get along with others.

The highly educated fall prey to overconfidence, not just high school students. A survey of college professors found that 94% believe their work is above average relative to that of their peers.

Why Do We Become Overconfident?

Cognitive psychologists like Daniel Kahneman assert that one of the reasons is because society rewards overconfidence.

He explains that people want leaders to display high levels of confidence–showing they believe in themselves and their ideas. In fact, one study that evaluated over 75,000 leaders found a direct correlation between displays of confidence and the perception of competence.


But if overconfidence is so damaging in practice, why is it so widely rewarded? To answer this question, we need to look at what it does to the human brain.

Simply put, overconfidence reduces the perception of risk. Our brains, thanks largely to evolution, are instinctively risk-averse, a tendency that overconfidence helps us overcome. It reduces those feelings of caution and hesitation and replaces them with certainty.

Yet ironically, the blinding affect that overconfidence has on us actually undermines effective decision-making. And as a result, it increases the inherent risk involved in making a choice. In other words, while it may cause you to feel less risk, it actually heightens the risk of failure.

How To Strike A Healthier Balance

So how do you avoid this? One way to make sure overconfidence doesn’t corrupt your decision-making is by practicing awareness the way you would any other skill. It’s hard to fight against the unknown. Simply staying attuned to feelings of uncertainty can help you stand better guard. Over time, you’ll strengthen the presence of mind it takes to recognize when your judgment feels clouded.

A second strategy: Ask the right questions. For instance, one study found that asking reflective questions like, “How will I do this?” or simply, “Will I?” when attempting challenging tasks makes it more likely you’ll identify a solution quickly.

Why? Because this interrogative self-talk guides you away from thinking that you will succeed and toward considering how you’ll succeed. That can defuse overconfidence and stimulate your problem-solving abilities. In contrast, someone who’s overconfident will look at the same situation and blindly declare, “I will do this.” While that statement assumes everything will work out fine, the questions force you to actually figure it out.