The Overconfidence Bias

Illusions of Invincibility 

The workplace is prone to experience a variety of common cognitive biases. One bias, called the overconfidence bias, can exacerbate many other cognitive thinking errors. In a study, 93% of participants claim to be better than the average person in terms of their driving abilities (Svenson, 1981). Considering this improbability, we must question why so many individuals have an inflated sense of confidence in themselves.  

Failure to acknowledge our own limitations and overlook the instances in which our decisions were biased leads us down a path of suboptimal decision-making. Within organizations, this overconfidence in one’s own abilities can cause conflict with co-workers, poor investments, and missed opportunities.  

The Confidence Paradox 

The overconfidence bias is the tendency for an individual to have an inflated sense of their own abilities, physical appearance, intelligence, or knowledge. This inflated opinion of ourselves often leads to sub-optimal decisions or actions as we trust our own intuition instead of looking at the true facts.  

Overconfidence often stems from past successes that can blind individuals to the flaws in their approaches and hinder innovative solutions. For example, you may recall a very popular movie rental chain going bankrupt just six years after its peak ( The organization’s prior success dominating the movie rental realm caused them to downplay the potential for online streaming services and the decision to pass up the opportunity to buy the now current largest movie streaming service. An overconfident decision based on their past success ultimately led to their demise.

Confounding this paradox, is that this inflated confidence can also lead to having an inaccurate assessment of our own vulnerability to bias and errors. Without acknowledging this vulnerability, we are unable to combat other biases and heuristics such as egocentrism and availability bias.  

Between Confidence and Consequence 

Within organizations, the overconfidence bias can significantly impact the quality of decisions made. Decisions based off an inflated sense of confidence can cause one to overestimate their accuracy and underestimate the risks involved with a decision. At all levels of an organization, this bias can lead to suboptimal decisions that negatively impact organizational effectiveness.  

The overconfidence bias can also influence communication within organizations. Co-workers can mistake a confident assertion for competence and offer their support in favor of a poor decision. When leaders are overconfident, they may be less receptive to conflicting opinions or ideas and turn down innovative ideas. Issues with collaboration and team dynamics can also result from the overconfidence bias going unaddressed. When an overly confident team member fails to listen to the alternative choices presented by members of their team, creativity and innovation are stunted.  

Breaking the Illusion and Overcoming Overconfidence 

Mitigating the overconfidence bias involves training and educating employees on this common cognitive error. When employees understand the errors that we as humans are all prone to experience, self-awareness increases, and they are better able to recognize when they are committing this bias. 

Leaders should strive to promote a culture of open communication and encourage new ideas. Setting the example as leaders of learning from mistakes and taking accountability of decisions encourages team members to follow suit. Conducting post-mortems of decisions can help to assess whether the overconfidence bias influenced a decision. This in turn, can help to prevent the same occurrences from happening in the future.  

The Lantern Group specializes in applying behavioral science insights to positively influence behavior change within organizations. We take a unique approach when crafting organizational communications and training by fusing visual design with behavioral science to create messages that resonate with employees. Reach out to us today to find out how we can help your organization!  


Ola Svenson, ‘Are We Less Risky and More Skillful than Our Fellow Drivers?’, Acta Psychologica, 47 (1981), 143–48. 

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