Friday, November 4, 2011
Social Animal: #12--Grand Narrative
The Grand Narrative: We tell ourselves stories—narratives about who we are. Unfortunately, sometimes those stories are delusional. Overconfidence is one such illusion. For example, 90% of drivers, professors, entrepreneurs and students taking the SAT think they’re all above average! In one study, managers in advertising thought that their answers to industry knowledge questions were 90% correct, but they actually were (on average) only 49% correct. Computer industry folks thought they were 95% correct but (on average) were just 20% correct. In fact, over 99% people in one study overestimated their success. The stock traders—who were the most confident—traded the most and underperformed the market. We have a built-in psychological immune system that makes us delusional—often (if unchecked) allowing us to take in only that which confirms our good qualities, denying that data that attacks our worst ones. Finally, incompetent people exaggerate their competencies more than their better performing peers. So, to say that most people suffer from overconfidence, even delusional about their competence, is an understatement.