A Behavioral Demonstration of Overconfidence in Judgment

Published on May 30, 2013in Psychological Science
· DOI :10.1177/0956797612470700
Albert E. Mannes7
Estimated H-index: 7
(UPenn: University of Pennsylvania),
Don A. Moore53
Estimated H-index: 53
(University of California, Berkeley)
Overprecision—an excessive confidence that one knows the truth—is both the most durable and the least understood form of overconfidence. This article outlines an approach to the study of overprecision that avoids some of the methodological problems of other approaches and better reflects the way uncertainty affects choices in everyday life. We measured the precision in judgment implied by people’s tendency to adjust their point estimates of an uncertain quantity in response to the costs of overestimating or underestimating the correct answer. The results revealed robust overprecision. People adjusted their estimates less than they should have given their actual knowledge, and this effect was driven by their subjective confidence.
📖 Papers frequently viewed together
116 Citations
558 Citations
197 Citations
#1Daniel Kahneman (Princeton University)H-Index: 149
Daniel Kahneman, recipient of the Nobel Prize in Economic Sciences for his seminal work in psychology challenging the rational model of judgment and decision making, is one of the world's most important thinkers. His ideas have had a profound impact on many fields - including business, medicine, and politics - but until now, he has never brought together his many years of research in one book. In "Thinking, Fast and Slow", Kahneman takes us on a groundbreaking tour of the mind and explains the t...
10.5k Citations
#1Uriel Haran (CMU: Carnegie Mellon University)H-Index: 7
#2Don A. Moore (University of California, Berkeley)H-Index: 53
Last. Carey K. Morewedge (CMU: Carnegie Mellon University)H-Index: 27
view all 3 authors...
Overprecision is the most robust type of overconfidence. We present a new method that significantly reduces this bias and offers insight into its underlying cause. In three experiments, overprecision was significantly reduced by forcing participants to consider all possible outcomes of an event. Each participant was presented with the entire range of possible outcomes divided into intervals, and estimated each interval's likelihood of including the true answer. The superiority of this Subjective...
86 Citations
#1Craig R. M. McKenzie (UCSD: University of California, San Diego)H-Index: 38
#2Michael J. Liersch (UCSD: University of California, San Diego)H-Index: 7
Last. Ilan Yaniv (HUJI: Hebrew University of Jerusalem)H-Index: 26
view all 3 authors...
People’s 90% subjective confidence intervals typically contain the true value about 50% of the time, indicating extreme overconfidence. Previous results have been mixed regarding whether experts are as overconfident as novices. Experiment 1 examined interval estimates from information technology (IT) professionals and UC San Diego (UCSD) students about both the IT industry and UCSD. This within-subjects experiment showed that experts and novices were about equally overconfident. Experts reported...
110 CitationsSource
#1Pascal Mamassian (Paris V: Paris Descartes University)H-Index: 36
Overconfidence can place humans in hazardous situations, and yet it has been observed in a variety of cognitive tasks in which participants have to rate their own performance. We demonstrate here that overconfidence can be revealed in a natural and objective visuo-motor task. Participants were asked to press a key in synchrony with a predictable visual event and were rewarded if they succeeded and sometimes penalized if they were too quick or too slow. If they had used their own motor uncertaint...
49 CitationsSource
#1Don A. Moore (CMU: Carnegie Mellon University)H-Index: 53
#2Paul J. Healy (OSU: Ohio State University)H-Index: 13
The authors present a reconciliation of 3 distinct ways in which the research literature has defined overconfidence: (a) overestimation of one's actual performance, (b) overplacement of one's performance relative to others, and (c) excessive precision in one's beliefs. Experimental evidence shows that reversals of the first 2 (apparent underconfidence), when they occur, tend to be on different types of tasks. On difficult tasks, people overestimate their actual performances but also mistakenly b...
1,022 CitationsSource
Abstract In an experiment decision-makers used time series information on the past demand for products to decide on production levels to meet the next period's demand. Either shortages cost more per unit than surpluses or the asymmetry of losses was in the opposite direction. The decision-makers were either: (i) unsupported, (ii) provided with statistical point forecasts of the next period's demand or (iii) asked to estimate probability distributions of next period's demand using the fractile me...
20 CitationsSource
#1Michael Lawrence (UNSW: University of New South Wales)H-Index: 26
#2Marcus O'Connor (USYD: University of Sydney)H-Index: 27
Abstract Many practicing forecasters operate in an environment where there are either implicit or explicit biases favouring under- or over-forecasting. For example some marketing executives may be rewarded for exceeding the forecast which operates, in effect, as a sales target. In other organizations, the forecast may be set high to encourage greater effort. Previous studies show that most practical forecasts are indeed significantly biased, with some organizations biased one way and some the ot...
26 CitationsSource
#1Anders Winman (Uppsala University)H-Index: 22
#2Patrik Hansson (Umeå University)H-Index: 10
Last. Peter Juslin (Uppsala University)H-Index: 32
view all 3 authors...
Format dependence implies that assessment of the same subjective probability distribution produces different conclusions about over- or underconfidence depending on the assessment format. In 2 expe ...
69 CitationsSource
Judges were asked to make numerical estimates (e.g., In what year was the first flight of a hot air balloon?). Judges provided high and low estimates such that they were X% sure that the correct answer lay between them. They exhibited substantial overconfidence: The correct answer fell inside their intervals much less than X% of the time. This contrasts with choices between 2 possible answers to a question, which showed much less overconfidence. The authors show that overconfidence in interval e...
315 CitationsSource
#1Kent Daniel (NU: Northwestern University)H-Index: 35
#2David Hirshleifer (Max M. Fisher College of Business)H-Index: 81
Last. Avanidhar Subrahmanyam (UCLA: University of California, Los Angeles)H-Index: 76
view all 3 authors...
This paper offers a model in which asset prices reflect both covariance risk and misperceptions of firms' prospects, and in which arbitrageurs trade against mispricing. In equilibrium, expected returns are linearly related to both risk and mispricing measures (e.g., fundamental/price ratios). With many securities, mispricing of idiosyncratic value components diminishes but systematic mispricing does not. The theory offers untested empirical implications about volume, volatility, fundamental/pric...
668 CitationsSource
Cited By28
#1Edgar E. KauselH-Index: 23
#2Francisco CarrascoH-Index: 1
Last. Arturo Rodriguez (University of Chile)H-Index: 2
view all 5 authors...
Research has paid little attention to how overconfidence evolves over time. We examined how task experience (experience within a task using a sequence of items) and outcome feedback affected accura...
1 CitationsSource
#1Don A. Moore (University of California, Berkeley)H-Index: 53
#2Derek Schatz (Accenture)H-Index: 1
Overconfident people should be surprised that they are so often wrong. Are they? Three studies examined the relationship between confidence and surprise in order to shed light on the psychology of overprecision in judgment. Participants reported ex-ante confidence in their beliefs, and after receiving accuracy feedback, they then reported ex-post surprise. Results show that more ex-ante confidence produces less ex-post surprise for correct answers; this relationship reverses for incorrect answer...
1 CitationsSource
#1Julia A. Minson (Harvard University)H-Index: 11
#2Christopher Umphres (Harvard University)H-Index: 1
Across seven studies (combined N = 5,484), we demonstrated that confidence in one’s judgments decreases over a series of quantitative estimates. This finding was robust to various methods of confid...
2 CitationsSource
#1Tomas Reyes (UC: Pontifical Catholic University of Chile)H-Index: 5
#2Roberto Vassolo (UC: Pontifical Catholic University of Chile)H-Index: 15
Last. Stephen X. Zhang (University of Adelaide)H-Index: 18
view all 5 authors...
We investigate the moderating effect of the business cycle on the positive relationship between CEO overconfidence and firm performance. We propose that the expansion years of the business cycle en...
1 CitationsSource
#1Berno Buechel (University of Fribourg)H-Index: 7
#2Stefan Klößner (Saarland University)H-Index: 8
Last. Heiko Rauhut (UZH: University of Zurich)H-Index: 13
view all 4 authors...
We investigate how the selection process of a leader affects team performance with respect to social learning. We use a laboratory experiment in which an incentivized guessing task is repeated in a star network with the leader at the center. Leader selection is either based on competence, on self-confidence, or made at random. In our setting, teams with random leaders do not underperform. They even outperform teams with leaders selected on self-confidence. Hence, self-confidence can be a dangero...
1 CitationsSource
#1Susan A. J. Birch (UBC: University of British Columbia)H-Index: 18
#2Rachel L. Severson (UM: University of Montana)H-Index: 15
Last. Adam Baimel (Oxford Brookes University)H-Index: 6
view all 3 authors...
The most readily-observable and influential cue to one’s credibility is their confidence. Although one’s confidence correlates with knowledge, one should not always trust confident sources or disregard hesitant ones. Three experiments (N = 662; 3- to 12-year-olds) examined the developmental trajectory of children’s understanding of ‘calibration’: whether a person’s confidence or hesitancy correlates with their knowledge. Experiments 1 and 2 provide evidence that children use a person’s history o...
3 CitationsSource
#1Derek Schatz (University of California, Berkeley)H-Index: 1
#2Don A. Moore (University of California, Berkeley)H-Index: 53
Overconfident people should be surprised that they are so often wrong. Are they? Three studies examined the relationship between confidence and surprise in order to shed light on the psychology of overprecision in judgment. Participants reported ex-ante confidence in their beliefs, and after receiving accuracy feedback, they then reported ex-post surprise. Results show that more ex-ante confidence produces less ex-post surprise for correct answers; this relationship reverses for incorrect answer...
#1Grace O'Malley (UCD: University College Dublin)H-Index: 3
#2Lynn Irwin (UCD: University College Dublin)H-Index: 2
Last. Suzanne Guerin (UCD: University College Dublin)H-Index: 23
view all 4 authors...
3 CitationsSource
#1Patrick J. Cushen (MSU: Murray State University)H-Index: 2
#2Jana Hackathorn (MSU: Murray State University)H-Index: 14
Last. Jordan Daniels (MSU: Murray State University)H-Index: 1
view all 10 authors...
Students frequently request concept-list study guides prior to exams, but the benefits of instructors providing such resources are unclear. Research on memory and comprehension has suggested that s...
#1Raúl A. Borracci (UBA: University of Buenos Aires)H-Index: 8
#2Eduardo B Arribalzaga (UBA: University of Buenos Aires)H-Index: 8
Background Overconfidence is the tendency to overestimate the knowledge, capacity, or performance one really possesses. This cognitive bias could be potentially dangerous in medical decision-making, considering the impact it could have on patient health care. The aim of this study was to evaluate the incidence of overconfidence and underconfidence in medical student knowledge on general surgery by using traditional and new statistical approaches. Methods During the application of a multiple-choi...
6 CitationsSource