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One manifestation of the overconfidence effect is the tendency to overestimate one's standing on a dimension of judgment or performance. This subsection of overconfidence focuses on the certainty one feels in their own ability, performance, level of control, or chance of success.
Image credits: TheRandomAwesomeGuy So why do we become overconfident even when we’re wrong? “Because it works – at least in the short term,” the communication expert says.
This is the case, for example, when the price of a good, such as a used car, is lowered by the buyers' uncertainty about its quality. An overconfident buyer unaware of their lack of knowledge may be willing to pay a much higher price because they do not take into account all the potential flaws and risks relevant to the price. [2]
There are plenty of examples of overly confident experts leading followers astray. Think back to the 1998 implosion of Long-Term Capital Management , a hedge fund run by several Nobel Prize winners.
The illusion of control is the tendency for people to overestimate their ability to control events, for example, when someone feels a sense of control over outcomes that they demonstrably do not influence. [2] The illusion might arise because a person lacks direct introspective insight into whether they are in control of events.
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A 2009 study concluded "that all types of judges exhibit the hard-easy effect in almost all realistic situations", and that the presence of the effect "cannot be used to distinguish between judges or to draw support for specific models of confidence elicitation". [5] The hard-easy effect manifests itself regardless of personality differences. [2]
Image by Shutterstock Findings from a recent study by the Career Advisory Board, indicate a widening gap between America's hiring managers and job seekers. The third annual Job Preparedness ...