Working with the Overconfident

The Overconfidence Effect is a cognitive bias that causes us to have confidence in the validity of our judgments at a level beyond what their accuracy could reliably support. The effect is evident in three ways: (1) We tend to overestimate our own performance; (2) We tend to assess our own performance as higher than it actually is relative to others; and (3) We tend to be overly precise when we assess the certainty or accuracy of our own beliefs. [Moore & Healy 2008] [Brenner 2015.4] The effect is more pronounced when confidence is high.

When organizational decision-makers make their decisions, they rely on advice from subordinates and professional advisors, all of whom are susceptible to the Overconfidence Effect. If decision-makers fail to account for the Overconfidence Effect, they're at risk of making decisions that produce disappointing results. Many have therefore adopted strategies that are intended to mitigate the effect.

Experiential mitigation of the Overconfidence Effect

Training those who supply judgments and recommendations is one popular mitigation method. Educating advisors and advisees about the effect does help. But as Russo and Shoemaker note, "experience reduces overconfidence." [Russo & Schoemaker 1992] Training is good. Experiential training is better. Experiential experience is best. Actual experience has the added advantage that it's based on incidents that are relevant to the work at hand.

Here are three tactics that can improve the way we deal with the Overconfidence Effect.

Curmudgeon teams

When you're considering a proposal, appoint several people to team up to oppose the idea. Make it their job to ask the difficult questions and to pose the difficult what-ifs. This approach invigorates the debate, and it's a lot of fun, especially in costume. To avoid any long-lasting effect on individuals who role-play curmudgeons, rotate this job on a monthly basis. See "Guidelines for Curmudgeon Teams," Point Lookout for January 16, 2019, for more.

The Switch-Side Debate

In debates at work, either in the context of meetings, teleconferences, or any written communication context, people tend to attach themselves to one viewpoint or another. The Overconfidence Effect can then cause them to be even more tightly attached to that viewpoint. After people have settled on their viewpoints, ask everyone to switch to another. In a binary debate, for example, if they were in favor, they must now be opposed. By requiring everyone to then defend a position they have previously rejected, we create an environment that causes all participants to confront their own views. [McGinnis 2014]

Everyone must then open their minds to the possibility that their original viewpoint, which they regarded as correct, might now be questioned. If their confidence in their position was unjustified, they then find themselves in a context in which it's safe to question their original viewpoint. This process tempers overconfidence.

Premortems

Premortems are simulated retrospective examinations of future events, conducted as if those future events had already occurred — and failed. The name premortem is a play on the term postmortem, which is one of the names of the practice otherwise known as retrospective or after-action review. [Kerth 2001] By combining the benefits of psychological safety with a shift in temporal perspective, premortems offer advantages for anyone intent on tempering overconfidence. Participants in premortems, who are playing roles of future investigators of future failure, must necessarily relax any commitment to present positions, because the premise of the premortem is that the present position is flawed. See "Premortems," Point Lookout for March 23, 2022, for more.

Last words

Although popular topics related to the overconfidence effect tend to emphasize mitigation, exploitation of the effect can be of greater importance. For example, a negotiator who is skilled at creating overconfidence in his or her counterparts could influence the negotiation against the interests of the counterparts to such an extent that the durability of the negotiated agreement is compromised.  Top    Next Issue

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Footnotes

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More articles on Cognitive Biases at Work:

The Planning Fallacy and Self-Interest

A well-known cognitive bias, the planning fallacy, accounts for many unrealistic estimates of project cost and schedule. Overruns are common. But another cognitive bias, and organizational politics, combine with the planning fallacy to make a bad situation even worse.

The Rhyme-as-Reason Effect

When we speak or write, the phrases we use have both form and meaning. Although we usually think of form and meaning as distinct, humans tend to assess as more meaningful and valid those phrases that are more beautifully formed. The rhyme-as-reason effect causes us to confuse the validity of a phrase with its aesthetics.

Motivated Reasoning

When we prefer a certain outcome of a decision process, we risk falling into a pattern of motivated reasoning. That can cause us to gather data and construct arguments that erroneously lead to the outcome we prefer, often outside our awareness. And it can happen even when the outcome we prefer is known to threaten our safety and security.

Mental Accounting and Technical Debt

In many organizations, technical debt has resisted efforts to control it. We've made important technical advances, but full control might require applying some results of the behavioral economics community, including a concept they call mental accounting.

Managing Dunning-Kruger Risk

A cognitive bias called the Dunning-Kruger Effect can create risk for organizational missions that require expertise beyond the range of knowledge and experience of decision-makers. They might misjudge the organization's capacity to execute the mission successfully. They might even be unaware of the risk of so misjudging.

See also Cognitive Biases at Work for more related articles.

Forthcoming issues of Point Lookout

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Humor is such a valuable tool at work that it ought to be recognized as an official contribution by team members who provide the laughs that keep some teams from auto-destructing. Even if you're not known for bringing the funny, there are a few simple techniques that can change your image. Available here and by RSS on July 9.

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Unwelcome events have two kinds of effects on decision-makers. One set of effects appears as we respond to events that have actually occurred. Another set manifests itself as we prepare for unwelcome events that haven't yet occurred, but which might occur. Making a wrong decision in either case can be costly. Available here and by RSS on July 16.

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