The strategic benefits of overconfidence

Humans tend to exhibit systematically self-serving biases in their beliefs. They tend to think they are better, smarter, and nicer than they are, and attribute their success to themselves and their failure to external factors. They rationalise their errors and misdeeds while casting critical judgment on others’ missteps. This has often been interpreted as a sign that people are poor at forming judgments about themselves and the world. In contrast to this view, these belief distortions can be explained by the idea that evolution likely did not select for us to form accurate beliefs, but rather beliefs that can be useful. Overconfidence may actually be an adaptive feature of our cognition, providing advantages in various situations. At the same time, however, these individual advantages can generate collective costs. When overconfidence becomes widespread, it may lead to inefficient social equilibria-such as bargaining impasses, costly conflicts, or misguided leadership-where what is adaptive for individuals produces negative consequences at the group or societal level.