Humans have a tendency to believe in themselves more than they rationally would if they were accurate about their capabilities, a concept known as overconfidence. Subjective confidence in the self, also called self-confidence, is a good thing or at the very least better than the lack of self-confidence (Tenney et al., 2019). However, when the subjective confidence supersedes objective accuracy in personal capabilities, there is an increased propensity for personal biases that can negatively affect decision-making processes. Available research shows that overconfidence is a common problem amongst most humans (More & Schatz, 2017). Modern psychologists divide the manifestations of overconfidence into three main categories. These manifestations are overestimation, overprecision and overplacement. Whereas these manifestations vary from each other, they are not mutually exclusive and can play supplementary roles in a singular bias. The ability to understand proclivities for overconfidence is critical on evaluated overconfidence and mitigating its effect on decision-making.
Overestimation
Overestimation refers to the lack of objectivity in assessing personal capabilities, leading to an assumption that one is more capable than reality reflects. Most cases of overestimation happen when an individual faces an unassailable task or difficulty. The individual will wrongfully either underestimate the issue or overestimate the capability to handle the issue (More & Schatz, 2017). There are three main categories of overestimation.
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The first is the illusion of control, where an individual overestimated personal control over issues or situations (Widyadhana & Arfinto, 2018). For example, I was once involved in a minor traffic accident while driving on a rural road. There was some obstruction on the road but I was confident that my driving skills would enable me to navigate it without having to slow down. Even when I heard a bang and felt the car jolt, I was still in denial that I had hit something as I was sure about my accuracy.
The second is the planning fallacy where the individual accurately estimates the chore at hand but overestimates personal abilities or working pace (Moore & Dev, 2017). For example, I once hand an important assignment to finish and was running out of time. However, the assignment involved a topic that I was familiar with and was confident that I could complete it within three to five hours. As the date for turning in the assignment approached, I kept on procrastinating commencing the assignment as I had enough time. It would later turn out that I needed over ten hours of research and seven hours of writing to get the assignment done. I ended up taking a supplementary task to make up for the delay in submitting the assignment.
Finally, there overestimation caused by an optimistic bias that happens when an individual assumes that a happenchance will be favorable. This last category of overestimation is rare due to human mechanisms that seek to prevent disappointment (del Mar et al., 2016). Normally, when outcomes rely on chance, people tend to anticipate the worst since hope breeds disenchantment.
Overprecision
Overprecision is a common form of overconfidence and involves a misconception that the information that an individual has is the truth. Another perspective of overprecision involves overly assuming that the decision that an individual has made is right (Huang et al., 2017). Normally, the assumption that a decision is right depends on the information at hand. For example, in my early schooling years, I lost some money in school and conducted some informal, but according to me thorough investigations. The investigations arrived at the conclusion that one of my friends had taken the money. I confronted the friend leading to conflict and protestations of innocence. To avoid embarrassment, my friend gave me an equivalent of the money I claimed to have lost, a fact that made me brag about my investigation skills. A week later, I found the money I thought I had lost in my room! It was an important lesson in humility and the avoidance of biases as I still lost a close friend.
Overplacement
Overplacement is a holistic and comparative form of overconfidence that involves the belief that an individual is better, smarter and or more important than others. Overplacement combines a biased assessment of both the self and others, resulting in the individual seeming to supersede others. Available expert commentaries show that overplacement is among the most common forms of overconfidence as most people consider themselves to be more important than they actually are (Moore, Dev &Goncharova, 2018). Further, overconfidence is among the greatest contributors to biases that result in self-damaging decisions. As young teenagers, we formed a hospitality group where we raised funds to assist the needy in our community. I was highly dedicated to the group and worked hard to ensure its success. However, I once made a mistake that affected the reputation of the group but in my estimation, the mistake paled in importance, when compared to my contribution to the group. Therefore, instead of showing contrition, I told my friends that if they consider me a liability, they can always ask me to leave. We took a vote and each one of them voted against me, yet I expected the vote to reflect how much confidence the group had in me.
Conclusion
Overconfidence is the mother of all biases, both because of its high prevalence rates and its impact on the decision-making process. Ordinarily, overconfidence is not a psychological problem that needs a solution. However, overconfidence results in biases that can affect the making of important decisions. The best way to deal with overconfidence is to address the bias that it creates. Like all biases, the solution begins with admitting that the bias exists, then making provision for it in the decision-making process (Boldt, Gardelle & Yeung, 2017). Since overconfidence primarily affects the individual, self-evaluation is an important component of mitigating the effects of the biases that result from it.
References
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Huang, R., Tan, K.J.K., Sulaeman, J. and Faff, R.W., 2017. Optimism or Over-Precision? What Drives the Role of Overconfidence in Managerial Decisions?. What Drives the Role of Overconfidence in Managerial Decisions .
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