Confidence is a good thing for achieving success at work, playing sports, and even in combat, but the role overconfidence plays in human behavior can be both good and bad.
A mathematical model developed by two researchers to determine the role overconfidence plays in human behavior shows it can increase ambition, resolve, morale and persistence, all of which helps an individual achieve a goal. But according to the researchers, Dominic Johnson of the University of Edinburgh, Scotland, and James Fowler at the University of California, San Diego, too much overconfidence can lead to arrogance, which in turn can cause “market bubbles, financial collapses, policy failures, disasters, and wars.”
The model shows that overconfidence increases with the magnitude of uncertainty faced by an individual. And, according to the model, overconfidence rules the emotions when the value of the prize is perceived to be much higher than the cost of competing. Thus, according to the researchers, overconfidence is evident in such fields as international relations and the banking industry. But in those domains it can lead to war or the collapse of Wall Street.
While those events are viewed as bad, the model suggests that in a high-stakes game for a valuable prize, overconfidence is often the best strategy. Though overconfidence can lead to disaster, many times the overconfident person wins, beating out the less confident person.
The researchers note that “the fact that overconfident populations are evolutionarily stable may be one reason why overconfidence persists today in politics, business, and finance, even if it causes occasional disasters.” The unpublished research was posted in an online research archive.
Jim Dawson reports for Inside Science News Service.