Overconfidence Effect

We systematically overestimate our own knowledge, skill, and ability to predict outcomes. Our confidence intervals are almost always far too narrow.

• 90% of drivers believe they are above average — a statistical impossibility.
• When asked trivia questions and given a confidence range, people's 90% confidence intervals contain the correct answer only about 40% of the time.
• Financial analysts present their forecasts with great conviction — yet studies show their predictions are barely better than random chance.