Overcome your overconfidence bias

“There is nothing like success to blind one to the possibility of failure.” – Roger Lowenstein

Every day we hold onto certain kind of expectations about ourselves, others and about our circumstances. These expectations we hold about ourselves directly influence our attitudes, decisions, behaviours, perspectives, as well as interactions with others. To succeed in our goals and to achieve our objectives, we must have a realistic assessment of our expectations. Being confident that your expectations will be met is important in business or work and life in general. But confidence is not about having it all. Instead, it’s about being okay with whatever you have and using it to its best potential. However, If you don’t use it wisely, it turns into overconfidence which then turns against you. It is important not to be overconfident. For instance. being overconfident while making a decision, you may overlook something important or might not look at all because you are confident that you already know what to choose. 

You might be creative, hardworking, ambitious and might think you are much better in what you do. At the same time. you also might allow the confidence you gain from your talents to delude you into believing that you could do everything else to the same level of success in other areas. As a result, you become overconfident in your abilities. Such thinking can make you think that you’re invaluable to your company or in the work you do where in fact almost anyone could do your job. Research shows that we overestimate our precision of information that we have about a situation and thus tend to believe something is much more likely to occur than it really is. Such bias from overconfidence is quite prevalent where most of us believe that our judgments and decisions are better than they really are.

So, what is a overconfidence bias?

Overconfidence bias is in which people demonstrate unwarranted faith in their own intuitive reasoning, judgments or cognitive abilities. It is a tendency to hold a false and misleading assessment of our skills, knowledge, intellect or talent. You might come across such bias in yourself or in people around you in your personal or professional environments. You may see yourself a more capable than your colleagues, more knowledgeable or even ethical and talented.

What causes overconfidence bias?

Emotional and cognitive distortion that creates overconfidence can be a major hindrance to any form of success. Overconfidence bias might occur after recent success or because of a sense of self-importance. Sometimes it may be due to social pressure when the stakes are high as people tend to act on pretended knowledge as a preferred solution. It is also caused by doubt-avoidance, inconsistency-avoidance, incentives, denial and due to believing first and doubting later.

Sometimes, we all become victims of our own delusions of self-confidence where we begin to see ourselves valuable, honest and intelligent. We start viewing our successes as the result of our own efforts attributing it to our natural abilities thereby forgetting the others contributions or timing and other factors. We fail to recognise that skill in one area doesn’t always translate to skills in another. Each success confirms our heightened self-image creating overconfidence bias.

Overconfidence is something that can make us blind to the mistakes in our decisions and thought processes. It further manifests into overestimation where you overestimate your actual abilities, performance, the amount of control you have , or your chance of success. It also can manifest into overplacement where you believe that your position is higher than those of around you. Like for instance, you think you received higher score than your friend and in reality, your friend receives better scores than you do, in this situation, you have overplaced your scores. And it also manifests into overprecision when you are confident that you are correct.

Why overconfidence bias is bad for you?

Overconfidence affects your judgments and decisions in different ways. Here are some ways in which it does.

Over ranking

Overconfidence affects a people’s judgment as it relates their own personal performance as higher than it actually is. Generally, most of us think we are better at something than we really are and we are less likely to admit when we are not as good as we would like to be. This can cause problems as it can make you feel more valuable within a team or group or workplace and may end up taking too many risks. This creates a pattern for failure as your skills do not match up to your beliefs.

Illusion of control

This happens with the idea that if we can quantify something, we can measure it, understand it, and thus manage it.

Believing that you have more control over a situation than you actually do leads to you taking unnecessary risk, or inability to assess the risk involved in the situation. Also, this can lead to wrong decisions and choices in both personal and professional matters. Failure to accurately assess risk leads to failure in managing and accomplishing your goals.

Desirability effect

The desirability effect happens when people overestimate the odds of something happening simply because the outcome of a situation is desirable. This is also a type of overconfidence bias. Many times, this leads to many mistakes and faulty behaviours simply because we believe our desired outcome is more probable just because that’s the outcome we want.

Timing optimism

This occurs when we are too optimistic about how quickly we can perform a task and underestimate how long it takes to get things done. One outcome of over-confidence is missed deadlines and delayed projects on account of the planning fallacy. When is the last time that you finished any task or project early? And this leads to creating unrealistic project plans in hopes that the future will somehow be different than the present.

Overconfidence bias can do a lot of damage to your relationships, career, financial or investing choices, business and your productivity levels. Overconfidence bias leads to many errors in various walks of our daily lives. It becomes a major hindrance when it comes to improving your understanding of a situation.

• You misjudge your value, opinion, beliefs or abilities or you may oversimplify things.

• You may not prepare properly for a situation or may get into a situation that you are not equipped to handle.

• You may procrastinate to failure because of your timing optimism.

• Overestimating your abilities causes missed deadlines, shoddy performance and stress at the cost of your money, time, and your well-being.

• You may take excessive risks and make decisions that are not beneficial to you or your team.

• Being overconfident can affect your work, attitude and behaviour towards others.

• Leads to unreal expectations and makes you more vulnerable to disappointment.

How to avoid overconfidence bias?

Biased way of looking at a situation is considered as the most pervasive and potentially damaging of all the cognitive biases to which most of us fall victim. Almost all of us suffer from some kind of overconfidence bias in various situations. Here are few ways to stay unbiased.

• Past successes inflates our perception of our own abilities. When your self-image becomes tied to your last success, you may tend to overlook your mistakes and become judgmental. Success in past or expertise is no guarantee of future success. Just because you had a string of correct decisions has no bearing on the one you face now. Treat each new decision as if it were your first. Discuss the matter objectively and make a thorough assessment of the risk involved.

• Overconfidence by its very nature, distorts your own image of reality. It is important to recheck your facts about a situation. Disregard your initial judgment about a situation and check the validity of your assumptions. Develop habits and systems that provide feedback to stay connected to reality. Each success brings you closer to overconfidence and complacency. Cultivating a realistic attitude towards your successes and failures prevents you from untoward consequences.

• With overconfidence bias, you tend to ignore criticism and you might get into a false sense of security. Acknowledging your mistakes instead of blaming others helps you clear your heads of any hubris that might cloud your judgment. Reflecting as to what plans worked and what decisions yielded good results and what decisions ended up wrong, you can use your mistakes and failures as learning opportunities. When you get criticised, instead of defending, deal with it constructively to help improve yourself.

• As we accomplish more and more things, it is easy to believe that what we are doing is right. Trying to control every situation or believing that your contribution to a decision is more valuable than it actually is or trying to handle everything yourself or insisting that your way is the only way is a recipe for disaster. Recognising the role that others had in your success will keep you grounded and focusing on your specific role in failures will remind you that you have areas that you can improve.

• Look at multiple perspectives and think through the implication and consequences of a belief or an action. Alternate perspectives push you out of your comfort zone and force you to think critically and you may discover better way of doing things or improve yourself instead of giving into your overconfidence bias. Healthy discussions always give you new perspectives and let’s you see ways of doing things or improving yourself. So when making decision, be humble, seek out new perspectives and be well-informed to take into consideration of all the factors and risks involved.

• During our decision-making process or while making a choice, we first assess the familiarity of the options or opinions and search for facts in order to construct an explanation about why the familiar option is true. An explanation forms in our mind that really seems right and we tend to focus on that first familiar option which may not be right. Instead of option-fixation, make a best possible guess, then assume that guess is inaccurate, and then generate plausible reasons for why the guess was inaccurate. Research shows that overconfidence is reduced after listing the arguments that contradict the reasoning that lead to the guess and often the more estimates that are averaged the better, so long as they are based on different reasoning. This will minimise risk. Keeping your thinking in present instead of outcome lets you focus on what is needed right now and much more realistic and more achievable.

• The inherent state of overconfidence is strong when projecting our beliefs about our future. We tend to overestimate our ability to predict the time frame as we tend to put higher probability on desired events than undesired events. Work is always better done when more time is spent on it. Try to give yourself a bit more time than your first estimate. Double it if you can for completion of your tasks or projects. The more time you give yourself, the less chance you take of missing deadlines.

To conclude,

We all fall victim to moments and sometimes stretches of over-confidence which often end with disappointment or failure. And yet, despite what we think we have learned for next time, we continue to be over-optimistic about our abilities and the state of the future. The same mistakes occur again and again. We often take into account only our planning and generally ignore external factors and tend to indulge in over-assessment of our expectations and capabilities. We rate our competence too high and plunge into overconfidence bias. If over-confidence is not constantly checked, it leads to poor outcomes, failures and disappointments. To overcome this bias, you need to install objectivity into your systems and thinking. Keep yourself responsible and objective and try the above techniques to consciously confront overconfidence bias before it distorts your view of reality.