The overconfidence effect is the well-established finding that people's confidence in their answers and judgments typically exceeds their accuracy. When people say they are 90% confident in an answer, they are correct only about 75% of the time. This miscalibration between confidence and accuracy is one of the most replicated findings in the psychology of judgment and has significant consequences for decision making in domains from finance to medicine to law.
Key Structures
- Ventromedial prefrontal cortex — A prefrontal region involved in value-based decision making, emotion regulation, and the representation of reward outcomes.
- Orbitofrontal cortex — The ventral prefrontal region critical for representing reward value, evaluating outcomes, and guiding adaptive decision making.
- Decision Making — The cognitive processes involved in selecting a course of action from among multiple alternatives, integrating information about options, outcomes, and preferences.
- Overconfidence — The robust tendency for people to be more certain of their judgments and predictions than is warranted by their actual accuracy, one of the most pervasive cognitive biases documented.
Key Functions
Demonstrate that people's confidence in their judgments consistently exceeds their accuracy, reflecting poor calibration of subjective probabilities.
Forms of Overconfidence
Moore and Healy (2008) distinguished three forms. Overestimation: thinking you performed better than you actually did. Overplacement: thinking you are better than others (the "better than average" effect — most people rate themselves above average on positive traits). Overprecision: being too certain about the accuracy of your beliefs (setting too-narrow confidence intervals). Overprecision is the most robust form and the hardest to eliminate.
Well-calibrated judgment means that confidence matches accuracy: when you say you are 80% sure, you should be right about 80% of the time. Weather forecasters are among the best-calibrated experts, likely because they receive frequent, unambiguous feedback. Most other experts — doctors, lawyers, financial analysts — show significant overconfidence. Training in calibration can improve it, but the improvement is often temporary and domain-specific.
Disorders
- Mania (extreme overconfidence)
- Narcissistic personality disorder — A personality disorder characterized by grandiosity, need for admiration, and lack of empathy, associated with altered self-referential processing.
- Poor risk assessment — Systematic errors in evaluating the probability and magnitude of risks, often driven by availability and representativeness heuristics.