The overconfidence effect is a cognitive bias where a person's confidence in their judgments is greater than the actual accuracy of those judgments. This miscalibration often leads people to overestimate their performance, believe they are better than others, or express unwarranted certainty in their beliefs. Studies have shown that individuals tend to exhibit overconfidence, especially on difficult tasks, leading them to believe they have achieved 100% accuracy when they are actually wrong a significant percentage of the time.
A well-known example of the overconfidence effect can be seen in the case of American drivers, where 93% of them rate themselves as better than the average driver, despite objective data showing that this cannot be true for such a large percentage.
To overcome the overconfidence effect, individuals can seek external feedback on their performance, engage in self-reflection to understand their actual abilities, and rely on data-driven decision-making rather than intuition alone.