11 Types of Overconfidence

John Spacey, August 01, 2018

Overconfidence is a tendency to overestimate your capabilities and underestimate challenges, risks and competition. The following are common types of overconfidence.

Optimism

Optimism is a tendency to play up positive information and downplay negative information. This is a positive trait that is associated with creativity and an ability to develop productive relationships that are win-win. That being said, optimism is a common root cause of overconfidence. This can be prevented with techniques such as defensive pessimism.

Wishful-thinking

Estimates and predictions based on what you want to happen as opposed to evidence.

Corporate Narcissism

A corporate culture with excessive pride that leads to negative behaviors such as viewing customers as unintelligent and competitors as weak.

Dunning-Kruger Effect

A tendency for incompetent individuals to view a task as easy and highly competent individuals to view the same task as difficult. This may be due to the incompetent individual misunderstanding the complexities and risks involved in the task. For example, a physicist may propose a high speed train system with some initial calculations and suggest it can be built in a year for $1 billion. A seasoned designer of high speed trains may look at the same system and estimate the development time at 10 years with $22 billion. The physicist may be thinking purely in terms of the physics of shooting a vehicle down a tube without considering implications in areas such as safety, passenger comfort and operations.

Overconfidence Effect

The tendency for overconfident individuals to view their judgments as extremely accurate. For example, an individual who develops an accurate prediction may have only moderate confidence in it. An individual who develops an inaccurate prediction may be extremely confident that it is correct.

Above Average Effect

A tendency for most people to view themselves as above average in certain areas. This is impossible as most people can't be above average by definition. For example, a city where 85% of families believe they have above average family income for their area.

Illusory Superiority

An individual who believes they are superior to others without sufficient hard evidence to support this idea. This may be a coping mechanism that gives a person confidence. In some cases, illusory superiority may simply ignore negative evidence such as a soccer player who feels they are superior despite poor performance outcomes. More commonly, illusory superiority occurs in areas that are difficult to judge such as leadership or social status. For example, an individual who views themselves as a cultural elite because they eat artisanal food. This may be an illusion because few independent observers would view this as a significant cultural accomplishment such as mastering the violin.

Positive Illusions

Being too positive about yourself and groups to which you belong as a calculated strategy. This is a part of normal thought and can be used as a practical approach to improving happiness and results. For example, a public speaker who strongly believes they are a good public speaker may perform better than a public speaker who has a low opinion of their own abilities. Likewise, having overconfidence in those around you tends to make you likeable and may inspire people to try to live up to your high opinion of them. This is known as the heliotropic effect.

Illusion of Control

The belief that you can control things where you have little or no control in reality. The classic example is a gambler who "has a system."

Not Even Wrong

Extreme overconfidence that is far detached from reality such that people might not even understand what you are talking about. For example, a new hire out of university who goes straight after the CEO's job in a large firm.

Failing Upwards

A tendency for overconfident people to fail but then be rewarded anyway. This may be related to traits such as aggression, sociability, resilience, risk taking, decisiveness and a willingness to provide direction in the face of uncertainty.

Notes

All else being equal, it is possible for overconfident people to outperform realistic people over time as they are exposed to more learning opportunities such as failure, stresses and intensive competition. In other words, taking on excessive and miscalculated risk can be beneficial if you are lucky enough to survive it.