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How to Calibrate Your Decisions Wisely
- Read in 12 minutes
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- Contains 7 key ideas
Perfectly Confident (2020) is an in-depth exploration of what confidence is and how we can leverage it effectively. Having too much confidence can be just as bad as having too little. But how do you strike the right balance and become perfectly confident? Drawing on psychology, economics, and his own research into business leadership, author Don A. Moore offers some insightful answers.
Key idea 1 of 7
Contrary to what many think, overconfidence isn’t harmless.
“Think you can or think you can’t – either way you’re right.” This quote, commonly attributed to Henry Ford, offers one way to think about confidence. It suggests that confidence is everything, and that your ability to succeed depends only on the amount of confidence you have.
But is this true? Well, yes and no. Make no mistake, belief in your own ability is important for success, and underconfidence can result in missed opportunities. But it’s not true that success comes down to simply believing in yourself. In fact, there are plenty of cases where overconfidence can be more harmful to your chances at success than underconfidence.
The key message in this blink is: Contrary to what many think, overconfidence isn’t harmless.
Overconfidence is dangerous because of how people make decisions. Decision-making is hard. People rarely have enough information to make a truly educated decision, and so they depend on their intuition to make choices, even important ones. But intuition can – and often does – lead to mistakes.
History is full of tragic accidents that came about because people made snap decisions that vastly overestimated their own ability. Take the 2008 financial crisis, for example: everyone was overconfident that they knew the value of the subprime mortgages they were buying. The fallout when people realized they didn’t? A global economic crisis.
In fact, research shows that too much confidence can sometimes lead to inferior performances. Psychologist Gabrielle Oettingen has studied the effect of confidence on outcomes and found that people who fantasize more about future successes are actually less likely to accomplish them. This effect can be seen on scales both large and small. A student who thinks he’s already prepared for a test might not study enough and doom himself to a bad grade. Or imagine two companies – one that anticipates great results in the next quarter and one that expects to be in the red. The second one will be more motivated to make changes for the better.
The lesson here is to use confidence to help you start the work you need to succeed, not bypass it. Confidence alone won’t let you finish a marathon if you’ve never run before. But confidence can give you the push to start training, one mile at a time.