The Hubris Paradox
"Impossible is a word to be found only in the dictionary of fools." — Napoleon Bonaparte
We've all been there — feeling like we know it all and can totally crush any challenge that comes our way. A growth mindset is a blessing, as it can help you start your business, change jobs, or leave a toxic relationship. But too much of it can turn into overconfidence. This overconfidence thing can actually be a real problem when it comes to making important decisions. You can end up doing really stupid stuff, like dying.
What's the deal with overconfidence?
Overconfidence is this common bias where we think we're way more awesome than we actually are, like 82% of Frenchmen who believe they are above-average lovers. I mean, you’re already awesome if you’re reading this newsletter, but be careful. Overconfidence shows up in three main ways:
Overestimation: Believing you're better than you really are.
Overplacement: Thinking you're better than everyone else.
Overprecision: Being way too certain about the accuracy of your beliefs or predictions.
How overconfidence messes up decision-making
Underestimating risks
Overconfident folks often downplay the risks and think they can handle anything. This is me getting loaded on NVDA 0.00%↑ puts when it traded at around $400. Overconfidence can lead to some pretty disastrous decisions, especially in high-stakes situations like investing.
Ignoring inconvenient info
Overconfident people tend to only listen to the stuff that supports their beliefs and tune out anything that contradicts them. This confirmation bias can seriously blind them to important facts.
Overly ambitious plans
In business, overconfidence can make managers think they have more control than they do. This leads to unrealistic projects and timelines that are doomed to fail.
Groupthink gone wild
When overconfident people dominate a group, it can squash more cautious voices. This groupthink effect means decisions don't get properly analysed before being made. Remember the 2015 Chinese stock market crash? That was partly driven by overconfident investors who thought they could outsmart the market. Oops.
How overconfidence can help us
I don’t know why overconfidence gets such a bad rap. If overconfidence is so bad and dangerous, why has that arrogant *sshole in your company not died yet? Why is he doing well actually? Well, maybe being full of yourself is helpful.
On a more serious note, if overconfidence did more harm than good, it would have been discarded as a trait after hundred of thousands of years of evolution.
Taking risks
Do you think Christopher Columbus was in his right mind when he set sail for the Americas in 1492? The guy was nuts. But thanks to his overconfidence, the Spanish Empire flourished for centuries after his feat. While some decisions come with a significant downside, they can offer a massive upside potential.
The power of self-belief
You know the old saying 'fake it 'til you make it'? Well, when it comes to overconfidence, that can actually work in your favour. In certain situations, like public speaking or leadership roles, believing in your own abilities can become a self-fulfilling prophecy.
It makes you more persistent
If you believe in yourself, you’re less likely to quit. And if you persist, you’re more likely to achieve your goals. Research shows that overconfident individuals show higher levels of persistence, which is a crucial trait to succeed in your affairs.
Increased social status
Have you ever inflated your CV to land a job? Funnily enough, people who believe their own exaggerations tend to do better in job interviews. Overconfidence helps you attain higher levels of social status. Besides that, people perceive overconfident individuals as more competent than their more modest peers.
Conclusion
If you want to survive and be likeable, modesty should be your choice. But if you want to kill it in business or politics, you can indulge in some healthy dose of hubris. My controversial take is that innovation would be impossible without some degree of overconfidence.
haha i love this topic. there's so many hilarious stats on how overconfident we are in tons of areas. most of us think we're above average drivers, most doctors think they're above average surgeons, most professors think they're above average pencil pushers (or whatever they claim to do).
It's important to keep the three "O's" in check. I think being overconfident is helpful in certain contexts but hindering (even dangerous) in others.