Why is Overconfidence Too Common Despite its Risks?

Lisa Franchi June 18, 2020

 Everyone knows the value of confidence. With it, people can find the best opportunities in life. Even if one is extremely talented and competent, lack of confidence often prevents a person from performing at their best. But too often, some people tend to become overconfident. That is – they tend to believe they’re better than others in terms of talents, abilities and intelligence, even if that’s not really the case. 

Overconfidence does have detrimental effects to people. Many people believe too much on their abilities even though they lack real skills and abilities. This often leads to organisations being headed by incompetent executives and managers. But despite these, why do people act with overconfidence?

In a new study, scientists investigated why it happens. 

Social status lures people to act with overconfidence

Everyone wants to obtain social status – defined as the respect, prominence, and influence people enjoy from others. In a study led by Cameron Anderson, associate professor from the Haas School, it was found that the desire to achieve social status lures people to become overconfident. He worked his Hass University colleagues Don Moore and Jessica Kennedy, and with Sebastien Brion from the University of Navarra. 

To find out the answer, the researchers conducted several experiments. In one experiment, 242 MBA students were asked to look over a list of historical names and events, books, and poems and identify which ones they recognised. Without the participants’ knowledge, some of the names were just foils. The researchers deemed that those who identified the foils are overconfident as they assume they are more knowledgeable than they actually were. In a survey, those who identified more foils achieved that highest social status.

In another experiment, Anderson and his group tried to identify the behaviours that make overconfident individuals appear wonderful. They found that people with great belief in themselves spoke often and with a confident vocal tone, gave more answers, and acted more relaxed and calm when they work with peers. They even looked more convincing than their more competent colleagues. 

Why is social status very important for people?

The researchers observed that people who believed that they are better than others even though they weren’t usually get the highest posts in the ladder of social status. Within groups, those who regarded as having high status tend to be admired and listened to. They also have a big say on major decisions discussed within their groups. 

In the final experiments, participants were asked to read two stories and imagine themselves as the main character. The first story is about losing a key and finding it. The other one required them to imagine getting a job with a prestigious company. Participants who read the second story rated their desire for social status much higher than those who read the story of the lost key. This shows that people’s desire for status led them to become overconfident, the researchers noted.

According to Anderson, their study is of important because it sheds light to the longstanding puzzle – why overconfidence is so common despite its risks. 

Furthermore, the study gives one reason why in most organisational settings, incompetent people are usually given higher positions than those who are truly competent and skilled. Anderson pointed out that in organisations; people get easily swayed by confident individuals even though such confidence isn’t justified. To avoid putting the wrong people in crucial positions, the researchers suggest that organisations should treat overconfident people with a grain of salt. 

The study is soon to be published in the Journal of Personality and Social Psychology.

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