Overconfidence

Question 1

3 components of overconfidence

Answer 1

1. Overestimation
2. Overprecision
3. Overplacement

Question 2

Overestimation

Answer 2

Common tendency to think we’re better, smarter, faster, more capable, more attractive, or more popular than we actually are. As a consequence we overestimate how much we will accomplish in a limited amount of time or believe we have more control than we actually do.

Question 3

Overprecision

Answer 3

The tendency to be too sure our judgements and decisions are accurate, uninterested in testing our assumptions and dismissive of evidence suggesting we might be wrong. It leads us to draw too narrow confidence intervals and to be too certain that we know the truth.

Question 4

Overplacement

Answer 4

The tendency to falsely think we rank higher than others on certain dimensions, particularly in competitive contexts. Overplacement can lead people to be too interested in competing with others in negotiations, in markets, in the courts, or in the battlefield. Overplacement may the reason for too many wars, failed negotiations and lawsuits.

“Better than average effect”

Question 5

Manifestations of Overestimation

Answer 5

1. Self-enhancement
2. The illusion of control
3. The planning fallacy
4. Optimistic bias

Question 6

Self-enhancement

Answer 6

• People are motivated to view themselves positively rather than accurately.
• Groups we belong to superior to other groups; characters in our name better than other characters.
• Self-enhancement may help explain the endowment effect.
• These effects operate at a sub conscious level and are evident when people answer quickly and automatically.

Question 7

The illusion of control

Answer 7

Where people think they have more control over a situation than they actually do.

Question 8

The planning fallacy

Answer 8

The common tendency to overestimate the speed at which we will complete projects and tasks.

Question 9

Optimistic bias

Answer 9

Tendency to overestimate the rosiness of our future - unrealistic optimism

Question 10

Causes of overprecision

Answer 10

1. To relieve internal dissonance, and allow us to feel sure of ourselves
2. Our outward expressions of confidence help others feel sure about us
3. Our cognitive functions could also be responsible as it is easier to recall things that support our beliefs than disprove them

Question 11

Consequences of overprecision

Answer 11

1. Our assurances makes us too reluctant to take advice from others
2. Make us suspicious of this whose views differ from ours
3. Makes us too quick to act on our own opinions
4. Makes us too slow to update our erroneous beliefs