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The overconfidence effect is a well-established bias in which a person's subjective confidence in their judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. [1] [2] Overconfidence is one example of a miscalibration of subjective probabilities.
Some researchers include a metacognitive component in their definition. In this view, the Dunning–Kruger effect is the thesis that those who are incompetent in a given area tend to be ignorant of their incompetence, i.e., they lack the metacognitive ability to become aware of their incompetence.
Illusory superiority has also explained phenomena such as the large amount of stock market trading (as each trader thinks they are the best, and most likely to succeed), [21] and the number of lawsuits that go to trial (because, due to illusory superiority, many lawyers have an inflated belief that they will win a case). [22]
An example is where people predict the value of a stock market index on a particular day by defining an upper and lower bound so that they are 98% confident the true value will fall in that range. A reliable finding is that people anchor their upper and lower bounds too close to their best estimate. [14] This leads to an overconfidence effect ...
In a 2011 article, Kahneman recounted the story of his discovery of the illusion of validity. After completing an undergraduate psychology degree and spending a year as an infantry officer in the Israeli Army, he was assigned to the army's Psychology Branch, where he helped evaluate candidates for officer training using a test called the Leaderless Group Challenge.
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]
Choice-supportive bias or post-purchase rationalization is the tendency to retroactively ascribe positive attributes to an option one has selected and/or to demote the forgone options. [1]
The worse-than-average effect or below-average effect is the human tendency to underestimate one's achievements and capabilities in relation to others. [1] It is the opposite of the usually pervasive better-than-average effect (in contexts where the two are compared or the overconfidence effect in other situations). It has been proposed more ...