The following is a conversation between Don Moore, Author of Perfectly Confident: How to Calibrate Your Decisions Wisely, and Denver Frederick, the Host of The Business of Giving.
Denver: We have been told for the longest time that the more confident we are the better, but my next guest says that way of thinking can lead to enormous trouble. He is Don Moore, a professor at the Berkeley Haas School of Business and Author of Perfectly Confident: How to Calibrate Your Decisions Wisely.
Welcome to The Business of Giving, Don!
Don: Thanks. Great to be with you, Denver.
Denver: What first got you interested in this topic? I don’t know many people who have studied confidence the way you have. What got you going?
Don: The years-long investigation into confidence originated in a curious finding from my dissertation, where I found what appeared to be underconfidence, and chasing that result down led me into a fascinating set of studies identifying when people are overconfident, when they’re underconfident, and when they can be well-calibrated.
Denver: What is confidence? How do you define it?
Don: Confidence is your belief in yourself, your abilities, your potential for performance, and your likelihood of success. It is a belief that relates to a verifiable reality.
Denver: Are people more or less born confident? Or do they become that way through their lives?
Don: No. My research does not support the idea that some people are confident in all things, and some people just lack confidence in all things, that if you measure different sorts of confidence, you’ll find inconsistencies within the same person. You measure over time, or different domains, or ask the question in different ways. And it’s not like there are some people who are just confident about everything. There aren’t. It varies by person and situation such that it doesn’t make a whole lot of sense to think about some people as consistently confident.
Denver: Yes. That’s really interesting. So, it really is domain-dependent, and it is customized to that particular situation.
Well, then let me ask you about one generalization that I think a lot of people might have, and that is most men are overconfident and most women are underconfident. Any truth to that at all?
Don: So, that finding is contested, which is to say that there isn’t a lot of support for it in the published research literature. There is some support for it, and the support that’s out there is, in my view, is weak and inconsistent. Notably, it is inconsistent with the stereotype we hold of male and female overconfidence. In this stereotype, men are certain of themselves. They mansplain things to women, and they refuse to ask for directions because they’re so sure of themselves.
Well, that’s the variety of overconfidence that’s been called overprecision — the excessive certainty that your beliefs are accurate, or that you know the truth. And I know of no credible published finding showing a systematic difference between men and women on overprecision. What differences have been documented in the literature relate to overplacement — that is the excessive belief that you’re better than others. And even that seems to be domain-constrained. It’s only true for some domains and in other domains, women think that they’re better than others. So, it’s complicated.
Denver: Yes. I’ll tell you one thing, and there’s a lot of studies on this that we all think we’re better than others at is, let’s say, driving. Ninety-three percent of people think they’re better than the average driver, and that goes across a lot of domains… like I’m nicer than other people. What’s at the root of all that, and how does one correct it and try to put it into, ground zero?
Don: Excellent questions. The driving result is most attributable to vagueness in the question… because everybody gets to decide for themselves what makes a good driver. For my dad, caution was preeminent. He was an exceedingly, pathologically cautious driver. My son, on the other hand, sort of the opposite end of the spectrum. Now, each one can be better than the other according to their own idiosyncratic definition. But when you clarify what you mean by the question: What does it mean to be a good driver? As in, how many tickets have you received over the last year? Or how often do you exceed the speed limit? Or various specific questions… there, the bias goes away very quickly. It’s those idiosyncratic perceptions of what it means to be a good driver, or to be smart, or to be funny, that allow each person to define for themselves what it means to be good.
Being overconfident opens you up to making all sorts of dangerous mistakes…Being overconfident leads you to take risks that won’t turn out well.
Denver: Yes. Well, you’ll take that number down a lot if you asked about parallel parking. So, let’s talk about each of these starting with overconfidence. What are some of the shortcomings associated with somebody being overconfident?
Don: Oh, man! Being overconfident opens you up to making all sorts of dangerous mistakes. Overconfident leaders get their companies into all sorts of trouble. Overconfident investors make reckless choices about what to do with their money. Overconfident rock climbers don’t have the longest life expectancies. Being overconfident leads you to take risks that won’t turn out well.
Denver: What do you do to ratchet it back a little bit? You have a lot of techniques and practices you discussed in the book. Share a few of those with us.
Don: Yes. Probably the simplest and most general purpose is to ask yourself why you might be wrong. It’s not our default mode of thinking. More often, we go through life looking for a confirmation of our beliefs or support for the idea that we’re good and virtuous, and likely to be successful. Instead, ask yourself why you might be wrong. Listen to your critics and think about the mistakes you’re likely to be making.
Some psychologists talk about this as defensive pessimism, that is: anticipate all the ways that the future could turn out badly to better able, to prepare yourself to encounter those risks and avoid the disastrous results that could occur if you were too confident and therefore didn’t prepare enough.
Denver: You talked a little bit about a pre-mortem. Talked about that and how that would work.
Don: The pre-mortem is a useful decision approach that Gary Klein articulated and Daniel Kahneman talked about in his book. It’s where you get together — this is usually done in a professional setting where you’re thinking about some important decision, a high stakes acquisition, or a new product rollout — and you specifically imagine the project as a disaster, a failure. It was an embarrassment. It lost money. It turned out to be a complete mess. What are the most likely reasons why it would fail? And is there anything we can do now to protect ourselves from those risks? If yes, maybe we should play some of those hedging bets. If not, maybe we might want to reconsider the undertaking completely.
If… what visualization does is clarify for you what it would take to achieve the end state you desire, such that visualization of you winning the game or making the shot reminds you to practice… then evidence suggests that that can be quite helpful. But in the absence of actual practice, the evidence doesn’t suggest visualization is all that helpful.
Denver: Well, let me ask you a little bit more about that, and that has to do with visualization, and we have always been “kind of schooled” that if you vividly imagine something, that your brain really can’t tell the difference as to whether it actually happened or not. So, what happens when you put in negative visualization? Is that more inclined to lead to failure?
I’ll tell you one thing that I do, for instance, when I’m playing golf with my buddies, and I’m looking to beat them, I will invariably tell them not to hit the ball in the lake. And the next thing you hear is “dunk.”
Don: It’s an excellent question. So, there are some versions of that advice to visualize success that sound a little bit like magical thinking. So, the book, The Secret, probably deserves credit for going a little overboard on this one. If you just imagine it fervently enough, then you too can be transported to Mars, or be Pope or whatever you want.
Denver: The law of attraction gone wild.
Don: Yes, and the truth is that the visualization is not so powerful. There are also ways in which visualization can undermine your success. If, for instance, you are persuading yourself that your success is assured leads you to prepare less for that future. The students in my class who are most confident they are going to ace the exam and therefore don’t study are not those who get the best grades.
If, on the other hand, what visualization does is clarify for you what it would take to achieve the end state you desire, such that visualization of you winning the game or making the shot reminds you to practice — that effort to practice your golf swing, to practice your basketball shooting — well, then evidence suggests that that can be quite helpful. But in the absence of actual practice, the evidence doesn’t suggest visualization is all that helpful.
Denver: That is really interesting. We’re talking about overconfidence in the context of the individual. Have you run into… or maybe you could speak about overconfidence in the situation of an organization, or maybe even a country.
Don: In organizations, there are plenty of circumstances in which group interaction can enhance everyone’s tendency toward confidence. And that risk is exacerbated when the leader of the organization is someone who pushes emphatically toward more confident aspirations.
When organizations pick leaders, it is common for them to pick the more confident candidate. And when that person then sets fantastically ambitious goals — stretch goals for what everybody else should achieve — often, they’re setting those people up for failure and likely disappointment when they fall short of those tremendously ambitious goals.
Denver: Tell me what’s going on here. I will watch pundits on TV who will be spectacularly wrong three times in a row, and then, with 100% assurance, tell me what’s going to happen next. What’s the word for that?
Don: Oh my gosh. Don’t get me started on TV pundits. It’s clear that the people who get chosen for such roles are not the cautious, circumspect, well-calibrated forecasters. These are people with strong opinions who will go out on a limb to state something with a great deal of confidence, even when their track record of performance in the past is terrible. It can make for interesting TV, but don’t place your money on those bets.
Denver: And that’s a good thing to think about because you talk about that — actually making a bet.
Don: That’s a nice way to force yourself to reflect or to challenge those around you who you suspect might be overconfident. Invite with the question: Want to bet? Are you’re willing to put money on that belief that you claim so emphatically? Also asking yourself: Would I be willing to put money on that belief that I’ve got? It’s a nice way to discipline yourself or to help discipline others to get them to think harder and get them closer to good calibration.
Denver: For many, a year now, when I’ve been looking at these elections, I’ve always ignored the polls and looked at the betting on the candidate because the polls either going to lie, or they’re going to make them up, or they’re going to skew them — I don’t know what they’re going to do. But people who’ve placed money on a candidate, they kind of really believe that’s going to happen because they will be risking their money.
Don: They better have a pretty good record.
Whereas overconfidence leads us to make errors of commission, where we take risks we shouldn’t have, underconfidence presents the opposite problem. It makes us likely to make errors of omission, where we decline opportunities that would have turned out well.
Denver: So, let’s go to the other side of the equation, and that is underconfidence. What are some of the consequences of being underconfident?
Don: Whereas overconfidence leads us to make errors of commission, where we take risks we shouldn’t have, underconfidence presents the opposite problem. It makes us likely to make errors of omission, where we decline opportunities that would have turned out well.
We’re scared off by risks that we actually would have overcome. We decline to engage in social situations that come with a little bit of risk, but offer the opportunity of making a new lifetime friend. We are afraid to ask someone out because of the risk of embarrassment.
And underconfidence is real. It leads people to shy away from risks where they would have been successful, and it happens in all sorts of circumstances. The imposter syndrome is an example of underconfidence where people, capable people, wind up thinking that they’re not good enough.
Denver: So, here I am, sitting on the sidelines, watching life pass me by. What can I do if I’m underconfident to get into the game?
Don: So, one way to recover from the impostor syndrome is to help inform yourself of how others have navigated those same challenges. Many people suffer the impostor syndrome when they encounter some difficult situation, a difficult task for the first time, and their own challenges are very salient for them, but others’ challenges are invisible to them.
You’re struggling with some task, and you know it’s hard. You have no idea how other people have experienced that same challenge. Maybe talking to people who have overcome that challenge, maybe people higher in the organization who had to go through the same sort of difficult path of entry that you’re enduring… maybe they could help enlighten you about the challenges that they experienced early on in their careers and how they overcame them, and thereby help calibrate your sense of whether you’re good enough.
Denver: Is there anything that you can do for yourself? Let’s say I’ve been trying something, and I have failed and I failed and I failed, but I’m going to try it again. How can I get myself at least believing to myself that maybe this time it’s going to be different if there isn’t somebody from the outside to hold my hand and counsel me?
Don: Well, so your question presumes that believing you can do it is the right thing. Deluding yourself into thinking you can leap tall buildings in a single bound? No. That’s a waste of time, and you shouldn’t fool yourself that way. You should persuade yourself that you can achieve what you actually can achieve. How do you figure that out? That can be difficult.
You can look to your own prior performance; maybe there are challenges like this that you’ve overcome in the past. You can look to other people like you, or other examples. If nobody has ever done it, then you better reflect seriously on whether it’s possible or whether you’re wasting your time.
When we told people about the setup, they were ready to bet on the people in whom we had induced confidence — that they would perform better at all of these tasks. But no! We could not find any such effect. So, do you want to induce confidence in others? I’m not so sure. I think having them believe accurately in their likely performance is a much kinder gift.
Denver: That leads to my next question, and that is: Can you instill optimism and confidence into a person? Let’s say right before a math test, you speak to somebody and say, “You’re going to do great!” You speak to another group and say, “You’re going to do badly.” What’s the impact of that?
Don: We have attempted to study that very question. We set out to document the benefits of confidence for performance. We expected to be able to find the benefit of confidence on performance and in math tests, in trivia quizzes, in boring visual search tasks, in tests of athletic performance. We failed again and again and again to find any effect of confidence on performance… this despite the fact that our participants were sure that confidence would help them.
When we told people about the setup, they were ready to bet on the people in whom we had induced confidence — that they would perform better at all of these tasks. But no! We could not find any such effect. So, do you want to induce confidence in others? I’m not so sure. I think having them believe accurately in their likely performance is a much kinder gift.
Now, as a parent, I have struggled to provide that for my children. There are times when every parent sees their kid frightened off, afraid to engage in some activity because they’re afraid that they’ll fail or they’ll embarrass themselves… when you know if only they would give it a shot, they would love it. And I’ve attempted, in those circumstances, to encourage my kid to be a little bolder. In other circumstances, like when my 11-year old talked about how he was enjoying basketball and planning for his career in the NBA, I offered a little bit of moderation there, suggesting that it’s great that he loved basketball and it’d be a sport he could play his whole life, but that he should keep studying for his math class.
Denver: A little reality check. You know, I love that you brought that up. I did the same thing with my daughter. I’m a very, very encouraging parent, but I found that when they were really not good at something, and you told them that in a careful way, that your believability went up 100% for everything else you ever told them.
It’s when I think a parent is too positive and encourages them across the board, that once they get to that age, they say, “Ah, Dad’s just saying that because he always says that,” and there’s no credibility to it. Whereas, if you can sort of harken back to say, “Remember when you were nine years old, and we talked about soccer, and I said you better keep on studying?” It really goes a long way as a parent.
Don: Yes. Having the credibility of showing good calibration in your own confidence judgments, exactly as you described, can help others have more faith in you because you’ve demonstrated your wisdom and good judgment.
Denver: So, let me just sort of take this to a higher level, and that is to ask this question: Is there a correlation between confidence and success? And if there’s not, why does that myth prevail the way it does today?
Don: There is a correlation between confidence and performance. That has been demonstrated in many studies. Now, how do I reconcile those results with what I just described, where the people in our lab didn’t perform any better if they’re more confident? Where the correlation between those two has been documented is in naturally occurring confidence.
In our lab studies, we manipulated people’s confidence, holding constant other things like actual ability. But if ability leads to greater confidence and to a greater probability of success, then it’s perfectly reasonable to expect that that confidence should enhance the probability of success. But what those correlational studies can’t answer is whether you should want to induce greater confidence in yourself or others, independent of changes and ability, and whether that will lead to success. Our experiments, I think, provide more insight there.
Sure. If you’re more capable, if you’re actually more likely to succeed because you’ve practiced more, you’re more talented, whatever, then yes, your confidence should match that ability and that probability of success. Should you fool yourself into trying to be more confident in the absence of greater ability? Not so sure.
Denver: Not so sure. Yes. One of the benefits I always found to underconfidence is that it leads to overpreparation because if you’re really worried about… whereas if you’re overconfident, you sometimes can say, “I’ll bluff this one. I’ll skate on through.” So, it’s such an interesting dynamic.
Don: My pessimistic father also noted that the best way to go through life satisfied is to minimize your expectations about what you’re going to achieve so every positive outcome is…
Denver: I’m sure you had minimal expectations of exceeding 25 miles an hour with him, you know what I mean? We’re just going to go… very carefully.
So, finally, Don, what’s a good way to envision the future so people are perfectly confident?
Don: That’s a great question, and I’ve thought about it a lot in this context of forecasting. I think one way in which we get ourselves in trouble thinking about the future is by trying to make perfect predictions as if we can know the future with certainty. We can’t. The future is full of uncertainties, and being perfectly confident about the future entails thinking probabilistically about the uncertainties that must be there, and that we cannot eliminate… thinking realistically about the range of possible outcomes, how likely they are, and then placing smart bets about how to allocate our resources or our effort.
Denver: That’s always… I think good managers do that. They never ask one of their staff, people: Are we safe to proceed? They ask them: How safe are we to proceed? and try to get that gray area in terms of the answer as opposed to the yes or no, which sometimes… we do live in a black and white world.
So, the book is Perfectly Confident: How to Calibrate Your Decisions Wisely. Either too much or too little confidence, boy, that can lead to bad decision making, and this book will help you get it just right, kind of like Goldilocks. Thanks, Don. It was a real pleasure to have you on the program.
Don: The pleasure was mine. Thanks for the chance.
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