“No problem in judgment and decision making is more prevalent and more potentially catastrophic than overconfidence”. – Plous (1993)
The overconfidence effect is a well-established bias in which a person’s subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. For example, in some quizzes, people rate their answers as “99% certain” but are wrong 40% of the time. Overconfidence is one example of a miscalibration of subjective probabilities. Throughout the research literature, overconfidence has been defined in three distinct ways: (1) overestimation of one’s actual performance, (2) overplacement of one’s performance relative to others, and (3) the excessive certainty regarding the accuracy of one’s beliefs − called overprecision.