Definition:
The overconfidence effect occurs when a person’s level of confidence in their judgements and abilities exceeds their actual level of accuracy or skill. In this state, the feeling of being “right” or “in control” replaces a realistic assessment of one’s abilities, and the mind constructs an exaggerated image of itself.
Explanation and function:
Daniel Kahneman considers the overconfidence effect one of the most dangerous cognitive biases, because human judgement is highly vulnerable to it. This bias typically appears in three forms:
- Overestimation: The person believes their abilities are greater than they really are.
- Overprecision: The person overestimates the accuracy of their predictions and analyses.
- Overplacement: The person assumes they rank among the “top ten per cent” of society in intelligence, morality, or skill.
This unfounded sense of certainty leads a person to underestimate risks, ignore warnings, and believe they do not need the advice or expertise of others.
Classic example:
In a well-known study, 93 per cent of American drivers claimed that they drove “better than the average driver”, a statistically impossible claim.
This example shows how strongly the human mind can construct an unreal yet convincing image of its own ability.
Mental mechanism and outcome:
To reduce anxiety and preserve a positive self-image, the mind tends towards exaggerated self-assessment.
As a result:
- The person ignores warnings.
- They estimate the likelihood of error to be much lower than it actually is.
- They calculate the time and energy required for tasks as lower than the actual amounts, and because of their overconfidence, their plans end in failure.
These patterns lie at the root of many major human errors, from the Titanic and Chernobyl disasters to managerial mistakes and costly political decisions.
Real-life examples:
1. Finance:
Several consecutive years of profit in the stock market have led Maria to believe she has “special skill” in investing. She places a large portion of her capital into a high-risk stock without analysing the risks and suffers a heavy loss.
2. Politics:
David is so confident in his own judgement that he ignores expert advice and makes a decision that results in wide-ranging social consequences.
3. University:
Alexander considers himself highly intelligent and does not study enough for an important exam, then, contrary to his expectations, receives one of the lowest grades in the class.
4. Daily life:
Sofia is so certain that her partner will “never leave her” that she ignores his warnings, and through her behaviour drives him to the point where he ends the relationship.
Here, it should be noted that…
1. Overconfidence is always accompanied by an inner feeling of certainty rather than by actual evidence.
2. This bias prevents a person from seeing their own limitations and leads them to interpret criticism as a threat or an insult.
3. Many major failures have begun with the feeling that “I cannot be wrong.”
Why is this bias dangerous?
- It increases the likelihood of error and hides the risks.
- It opens the door to other cognitive biases.
- It numbs a person to warnings, criticisms, and objective realities.
- In politics, economics, research, and daily life, it can lead to harmful consequences.
How can we recognise and deal with it?
To identify it, we should ask ourselves:
– “Is my confidence in my ability based on real experience, or only on an inner feeling?”
– “If another person behaved in the same way, would I not consider it unreasonable risk-taking?”
– “Do I ignore expert criticism because I think I ‘know better’?”
The appropriate approach is this: We should examine external evidence, consult experts, and take the possibility of error as seriously as the possibility of success.
Connection to Wise Education:
Wise Education, as demanded by Article 26 of the Universal Declaration of Human Rights, emphasises careful observation, realism, and cognitive humility. A trained mind strives to observe all aspects of a phenomenon with precision so that it can form a complete picture of it. It then shares this apparently complete picture with others to ensure that nothing has been overlooked. Only after this verification does it prepare itself to engage with the phenomenon and make decisions about it. This method is what we call wise reasoning.
Conclusion:
The overconfidence effect shows that a feeling of certainty is not always a sign of correctness. Without Wise Education, a false sense of certainty emerges, becoming a trap that leads a person into various forms of crisis. When a person realistically assesses their abilities, their decisions become more logical, more precise, and more just.