Top Ten Behavioral Biases, Illustrated #3: Welcome to Lake Wobegon (Overconfidence)

We all like to think that we live in Lake Wobegon, where all the women are strong, all the men are good-looking and all the children are above average. Men — good-looking or not — seem particularly prone to the overconfidence problem, based upon how often they hit on women who are way out of their league or how infrequently they ask directions.

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In street parlance, “hero ball” is an epithet applied when a basketball player tries to take over a game as if he’s Michael Jordan (think Russell Westbrook). In the 1987 NBA Playoffs, renowned playmaker Magic Johnson – perhaps the greatest passer of all-time – went “hero ball” against a triple-team of Hall-of-Famers to beat the Larry Bird-led Celtics in the 1987 NBA Finals, ignoring a wide-open Hall of Famer with a much better shot in the process.

Even though Magic made the shot, it’s a classic instance of overconfidence, even from a player with good reason to be supremely confident. It’s what legendary basketball impresario Pat Riley (also then-Lakers coach) calls “the disease of me.“1

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Your mother may think you’re special. She probably does. You will almost certainly agree. Yet it’s highly unlikely that the world-at-large is quite so credulous.

Most of us think we are significantly better than average at most things (also known as illusory superiority). We’re also susceptible to the “endowment effect,” which describes the extra value we place on things just as soon as they become ours. One study even found that asking participants to imagine that a theory is their own biases them to believe in its truth. Charles Darwin nailed it: “ignorance more frequently begets confidence than does knowledge.”

A closely related problem is the Dunning-Kruger effect, whereby unskilled or even incompetent people fail to recognize their limitations. As David Wallace noted, “Many writers believe they are destined for greatness, and almost as many are wrong.”

The “fine” arts routinely offer up the likes of Raymond Roussel – “I was carrying the sun within myself and could do nothing to impede the tremendous light I was radiating” – and Florence Foster Jennings as wonderful yet dreadful exemplars of our overconfidence.

Even if we aren’t quite as bad as Mrs. Jennings, like Yogi, we all think we’re “smarter than the average bear” and better than we really are (for example, most millennials think that they will someday be rich). But there’s precious little evidence to support it all too often.

In one classic study, for example, 94 percent of professors rated themselves above average relative to their peers. Where were they when I was in college? In another, 93 percent of American drivers rated themselves above average, but are never on the freeway when I am.

Conversely, we all tend to think that our s*** doesn’t stink – figuratively and literally. ASAPScience confirmed in a blind smell test that we actually do like the smell of our own because the bacteria which creates the smell is unique to each person. On the other hand, when you smell someone else’s, your brain detects it as something that is trying to harm you.

The wife of a famous mountaineer, killed in an avalanche, was asked if she and her husband had talked about the risks he faced. “Oh yes, we talked about it,” she said. “I was aware from the very beginning. I fully accepted the possibility that this could happen. But you can’t really prepare for it. There’s this belief that it’s not going to happen to you.”

That’s true, right up until it does happen to you, and that’s overconfidence bias.

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1 Ironically, without sufficient confidence, and what is almost surely statistical overconfidence, nobody would start a business, run for president, or ask anyone out. As Wayne Gretzky famously said, you miss 100 percent of the shots you don’t take, which explains why a recent study found that users of online dating sites spend most of their time trying to contact people significantly out of their league. In too many instances, overconfidence trumps competence.

9 thoughts on “Top Ten Behavioral Biases, Illustrated #3: Welcome to Lake Wobegon (Overconfidence)

  1. Pingback: Top Ten Behavioral Biases, Illustrated (mostly via popular culture) | Above the Market

  2. I’m confident that your discussed over confidence delusions is confidently supplied with statistics with a good confidence interval. However, I’m also confident much of what we percieve of over confidence can really be attributed to many as a confidence game of the highest order.

  3. I always find the driver example to be a particularly bad example. All those drivers likely ARE above average, because each one is using different metrics to determine what “good” is. Also, if their metrics are anything like mine 🙂 some percentage of drivers are so horrible that they bring down the average enabling “most” to be above average.

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  5. Pingback: Top Ten Behavioral Biases – Invest In U

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