Better Than Average? Think Again

How overconfidence shapes decisions, habits, and human behavior.

Nov 12, 2025

We often associate the phrase “don’t be overconfident” with high-stakes bets in a casino. But more often than not, we find ourselves overestimating our own skills and knowledge. Have you ever said, “I’m definitely a better driver than average,” or the classic “I’m smarter than average”? What if I told you this is a clear case of overconfidence, especially when it’s based purely on your subjective opinion?

Heuristics: The Evolution of Human Decision-Making

Overconfidence is a cognitive bias that leads to an overinflation of one’s perceived capabilities, causing people to ignore relevant contradictory information or feedback.
This bias often stems from heuristics, which are the mental shortcuts our brain uses to conserve energy and make decisions faster. Think of it as a rule of thumb.

Example:
You buy a honey mustard sauce from Brand A and dislike it. By rule of thumb, you assume that all sauces from Brand A must taste bad.

It’s not all negative. If we had to stop and analyze every fact and variable before making a purchase, we would take forever to act. But the truth is, humans often reach inaccurate conclusions when they skip the proper analytical steps.

In behavioral economics, this limitation explains why humans do not always behave as rational actors.

“The only true wisdom is in knowing you know nothing.”
— Socrates

In philosophy, overconfidence is considered an epistemic flaw because it prevents us from assessing our own abilities critically and being open to revising our beliefs.
From this perspective, overconfidence is the opposite of Socratic humility, which emphasizes the importance of recognizing our own ignorance as the first step toward learning.

Think about it. If you believe you already know everything about a subject, say chemistry, you would not bother with new information or consider opposing evidence since you “know it all.”

Overconfidence reflects what we all deeply seek: certainty and control.
It can be partly adaptive, since confidence provides the strength to lead, create, and innovate. But when left unchecked, it becomes maladaptive, leading to misjudgments, errors, and stagnation.

Practical Tips Zone

Interestingly, the more vague we are with our definition of “better,” the easier it becomes to fall into overconfidence.

Take the earlier example. Many people claim they are “good drivers.” But if you make the question more specific, such as “Are you better than average at parallel parking?” far fewer hands would be raised.

With that in mind, here are five research-backed tips to keep your confidence balanced and productive.

1. Track Your Decisions with a Journal

Keep a record of predictions and outcomes. Behavioral finance research shows that tracking decisions improves accuracy and reduces overconfidence in investing and decision-making. (Barber & Odean, 2001)

2. Ask Specific Questions

Vague self-assessments inflate confidence. Making questions precise—like “Am I better than average at parallel parking?”—reduces bias. (Delhomme, 1991)

3. Seek Disconfirming Evidence

Actively look for information that challenges your assumptions. Cognitive psychology studies show this reduces confirmation bias and overconfidence. (Kahneman, 2011)

4. Use Data to Ground Decisions

Base your choices on evidence, benchmarks, or probabilities rather than intuition alone. Overconfident traders who ignore data tend to underperform.
(Barber & Odean, 2001)

5. Perform a “Premortem”

Before making a major decision, imagine it failed and list the reasons why. Harvard Business Review research shows that premortems reduce risk-taking and overconfidence in business decisions. (Klein, 2007)