WEBVTT - From the Vault: Overconfidence, Part 2 0:00:05.720 --> 0:00:07.960 Hey, welcome to Stuff to Blow Your Mind. My name 0:00:08.000 --> 0:00:10.840 is Robert Lamb and I'm Joe McCormick. In it's Saturday. 0:00:10.960 --> 0:00:13.400 Time to head into the old vault for a classic 0:00:13.440 --> 0:00:18.040 episode of the show. This one originally aired February and 0:00:18.160 --> 0:00:21.560 it's part two of our series about overconfidence. All right, 0:00:21.680 --> 0:00:27.400 let's let's just dive right into it. Welcome to Stuff 0:00:27.400 --> 0:00:29.400 to Blow Your Mind, a production of I Heart Radios 0:00:29.400 --> 0:00:37.920 How Stuff Works. Hey, you, welcome to Stuff to Blow 0:00:37.960 --> 0:00:40.680 Your Mind. My name is Robert Lamb and I'm Joe McCormick, 0:00:40.680 --> 0:00:42.640 and we're back with part two of our discussion of 0:00:42.760 --> 0:00:46.159 over confidence. That's right. If you did not listen to 0:00:46.240 --> 0:00:49.680 the previous episode, do go back and listen to that episode, 0:00:49.680 --> 0:00:51.760 because we're gonna lay the ground work. We're going to 0:00:51.840 --> 0:00:57.320 discuss over confidence in hubrists and mythology in human histories, 0:00:57.800 --> 0:01:00.800 and then get into the psychology of it. What various 0:01:00.800 --> 0:01:04.680 psychological studies have revealed and continue to reveal about the 0:01:05.000 --> 0:01:07.720 nature of over confidence and how we can divide this 0:01:07.840 --> 0:01:12.319 sort of a morphous concept of over confidence out into 0:01:12.520 --> 0:01:15.759 categories that can be more easily studied and understood. That's 0:01:15.840 --> 0:01:17.760 right now. In the last episode, One of the main 0:01:17.800 --> 0:01:20.600 things we talked about was this huge new review of 0:01:20.600 --> 0:01:22.880 the scientific literature on something known as the better than 0:01:22.959 --> 0:01:25.640 average effect, which is the tendency for people to rate 0:01:25.720 --> 0:01:29.280 themselves as better than average with respect to their peers 0:01:29.319 --> 0:01:32.720 on all kinds of stuff. One classic example is that 0:01:32.840 --> 0:01:35.800 something like nine three percent of people think they're a 0:01:35.880 --> 0:01:38.880 better than average driver. So if you're if you're listening 0:01:38.920 --> 0:01:41.080 to this as you drive, eyes back on the road, 0:01:41.480 --> 0:01:43.920 and make sure you use this turn signals, turn signals, stays, 0:01:43.959 --> 0:01:47.560 save lives, turn signals. Let other drivers and pedestrians know 0:01:47.680 --> 0:01:49.560 what you intend to do. Even if you think you're 0:01:49.600 --> 0:01:52.240 a great driver, drive like you're less good than you are, 0:01:52.440 --> 0:01:54.600 and it will make you a better driver. Drive like 0:01:54.720 --> 0:01:57.600 you can't see all the other cars and pedestrians around you, 0:01:57.640 --> 0:02:00.840 because sometimes you cannot drive like you're driving a murder weapon, 0:02:00.960 --> 0:02:04.680 because potentially you are. It's quite true, all right now. 0:02:04.760 --> 0:02:06.360 One of the things we talked about in the last 0:02:06.360 --> 0:02:10.840 episode was a paper from seventeen by Don Amore and 0:02:10.880 --> 0:02:15.360 Derek Schatz called The Three Faces of Overconfidence, which which 0:02:15.400 --> 0:02:20.440 actually broke over confidence down into three distinct categories of 0:02:20.440 --> 0:02:24.079 of bias or misperception, and uh. And we we talked 0:02:24.120 --> 0:02:25.639 about those a little bit last time. We're going to 0:02:25.680 --> 0:02:27.799 be exploring more of what that paper had to say, 0:02:27.800 --> 0:02:32.120 and it's critiques of overconfidence research specifically with reference to 0:02:32.160 --> 0:02:35.040 these three types of overconfidence, and as a brief refresher, 0:02:35.600 --> 0:02:41.480 the three types are overestimation, overplacement, and over precision. Overestimation 0:02:41.639 --> 0:02:43.880 is thinking that you're better than you are, and this 0:02:43.919 --> 0:02:46.440 would be with reference to some kind of, uh, you know, 0:02:46.520 --> 0:02:49.200 objective measure out in the world. So if you think 0:02:49.280 --> 0:02:51.520 that you are taller than you are, you know, if 0:02:51.560 --> 0:02:53.799 you think that you can jump higher than you can, 0:02:54.320 --> 0:02:56.680 if you think that you would get a better score 0:02:56.680 --> 0:03:00.600 on a test than you actually could, that's overestimation. The 0:03:00.639 --> 0:03:04.480 next one, over placement, is similar, but instead it's comparing 0:03:04.560 --> 0:03:08.000 yourself with other people. So the better than average effect 0:03:08.000 --> 0:03:11.280 would be an example of overplacement. It's, you know, thinking 0:03:11.320 --> 0:03:14.320 you are better than average compared to your peers at 0:03:14.400 --> 0:03:17.400 some task. Or it would be thinking that you know 0:03:17.520 --> 0:03:20.760 that you work harder than other people, or thinking that 0:03:20.880 --> 0:03:24.240 you are smarter than other people. Of course, with the if, 0:03:24.280 --> 0:03:28.120 it's over confidence meaning that those are not actually accurate assessments. 0:03:28.160 --> 0:03:31.120 And then finally the other one would be over precision, 0:03:31.160 --> 0:03:34.600 which is being too sure that you know the truth. Again, 0:03:34.639 --> 0:03:37.640 this this might be called epistemic over confidence. It's just 0:03:37.760 --> 0:03:40.840 being too certain that your beliefs are correct. Now, to 0:03:40.880 --> 0:03:45.080 get into more in chats is paper from. One of 0:03:45.120 --> 0:03:49.200 the questions that they address is what actually drives some 0:03:49.360 --> 0:03:52.800 of these different effects as as they are manifested. So 0:03:53.120 --> 0:03:56.960 they start with overestimation. What causes us to say I 0:03:57.040 --> 0:03:59.160 think we would get a better score on a test 0:03:59.280 --> 0:04:01.520 than we do, to think we have more money in 0:04:01.560 --> 0:04:04.840 the bank than we do. A common answer that people 0:04:04.880 --> 0:04:08.120 give to this is the idea of wishful thinking. It 0:04:08.160 --> 0:04:10.920 would feel good if this were true, therefore I believe 0:04:10.960 --> 0:04:15.000 it right. Uh. The authors don't think that this explanation 0:04:15.120 --> 0:04:17.599 is very plausible, and they offer several problems with it, 0:04:17.640 --> 0:04:20.280 and we can interrogate these, maybe disagree with them as 0:04:20.279 --> 0:04:22.440 we go on. But first of all, they say, you know, 0:04:22.480 --> 0:04:27.920 self delusion is demonstrably maladaptive. For example, a tendency toward 0:04:28.000 --> 0:04:30.960 wishful thinking about the safety of kissing sharks so with 0:04:31.040 --> 0:04:33.839 tongue is not a trait that the environment will tend 0:04:33.880 --> 0:04:38.080 to select For people overconfident about their academic abilities, will 0:04:38.120 --> 0:04:41.279 tend not to study and actually do worse. People who 0:04:41.320 --> 0:04:45.560 believe themselves invulnerable will take risks that sometimes get them killed. 0:04:45.920 --> 0:04:48.159 This might seem obvious, but there is actually plenty of 0:04:48.240 --> 0:04:51.320 research on this. I mean, people who are overconfident about 0:04:51.320 --> 0:04:54.880 their abilities do face a lot of downsides when those 0:04:54.880 --> 0:04:58.200 abilities are put to the test. Yeah, I mean, one 0:04:58.240 --> 0:05:01.120 example from literature that comes to mine is that of Macbeth, 0:05:01.880 --> 0:05:06.240 who believes himself protected by prophecy um and then of 0:05:06.279 --> 0:05:12.120 course uh snuffs it because exactly. But then again, I think, okay, 0:05:12.160 --> 0:05:14.159 so it is true that these people will face a 0:05:14.160 --> 0:05:18.320 lot of downside, But then again, people do engage in 0:05:18.400 --> 0:05:21.800 self destructive, self deluded behavior all the time. This is 0:05:21.800 --> 0:05:24.520 a common feature of human life. Yeah, I mean, for instance, 0:05:24.560 --> 0:05:27.320 we were just recently talking about the placebo effect on 0:05:27.400 --> 0:05:30.839 our movie episode where we talked about the fly and 0:05:30.960 --> 0:05:35.239 about the possibility that the placebo effect is basically due 0:05:35.279 --> 0:05:39.400 to uh, you know, this innate tendency towards self delusion 0:05:39.880 --> 0:05:42.400 that may very well be adaptive in at least in 0:05:42.440 --> 0:05:47.200 this scenario where yeah, we we benefit from being able 0:05:47.279 --> 0:05:50.400 to believe something is going to work and and uh 0:05:50.440 --> 0:05:54.839 and and and experiencing at least a small physical benefit 0:05:54.920 --> 0:05:58.080 from it, like a small curative benefit from it. And 0:05:58.120 --> 0:06:01.240 then um, you know, I also can't help but think that, 0:06:01.360 --> 0:06:05.400 you know, self delusion entails far more than just over confidence. 0:06:05.400 --> 0:06:08.320 It also entails all manner of paranoia. And there is 0:06:08.360 --> 0:06:11.760 a strong case for the adaptive nature of say, making 0:06:11.800 --> 0:06:15.360 a type one error in cognition false positive, the belief 0:06:15.400 --> 0:06:17.240 that the rustle in the tall grass is that of 0:06:17.240 --> 0:06:19.919 a tiger when it's not, because if you make the 0:06:19.960 --> 0:06:24.039 type two uh are you're more likely to be eaten 0:06:24.040 --> 0:06:27.520 by the tiger? Right? Right? Yeah, having accurate information about 0:06:27.520 --> 0:06:31.120 the world is actually very useful, and having inaccurate information 0:06:31.200 --> 0:06:33.960 can kill you. Yeah, but but I'm not so much 0:06:34.040 --> 0:06:36.960 you know, trying to disagree with the maladaptive self delusion 0:06:37.120 --> 0:06:40.640 argument that we mentioned earlier, but but rather, you know, 0:06:40.720 --> 0:06:43.200 to point out that the human experiences is rife with 0:06:43.240 --> 0:06:46.839 self delusions. So might a dash of overconfidence, even in 0:06:46.880 --> 0:06:50.760 the form of overestimation, served to balance out this alchemy 0:06:50.960 --> 0:06:54.159 of you know, of our perception of reality. For example, 0:06:54.279 --> 0:06:57.000 so you have a karaoke singer, and granted karaoke is 0:06:57.080 --> 0:07:01.320 very low stakes, but you could involve of social embarrassment, 0:07:01.680 --> 0:07:04.240 which you could fear would lead to ostracism, and that's 0:07:04.240 --> 0:07:07.960 actually one of the most powerful negative motivators on human behavior, right. 0:07:08.600 --> 0:07:10.760 But again, karaoke is also one of these things where 0:07:10.760 --> 0:07:12.680 like sometimes it's cool to do it badly. So this 0:07:12.720 --> 0:07:15.080 is not a perfect example, but so you have a 0:07:15.120 --> 0:07:18.760 kara karaoke singer that imbibes in a little liquid courage 0:07:18.800 --> 0:07:23.040 before taking the microphone, as most karaoke participants are are 0:07:23.080 --> 0:07:25.800 are wont to do. Uh, but yeah, they get a 0:07:25.800 --> 0:07:27.840 little liquid courage because they know they don't have the 0:07:27.840 --> 0:07:30.160 greatest voice in the world. And then they feel a 0:07:30.160 --> 0:07:32.320 little awkward getting up there, but but they know that 0:07:32.400 --> 0:07:35.680 a little bit of booze induced over confidence might help matters. 0:07:35.760 --> 0:07:37.560 I think you're exactly right there, and this this is 0:07:37.560 --> 0:07:39.880 funny to start here because I think while the authors 0:07:39.880 --> 0:07:41.680 make tons of good points, this is one of the 0:07:41.720 --> 0:07:44.320 ones they make that I might disagree with the most. 0:07:44.600 --> 0:07:48.400 I think that there are antagonistic adaptations in human behavior. 0:07:48.720 --> 0:07:51.920 One pressure might favor having an accurate picture of the world, 0:07:51.920 --> 0:07:54.560 assessing things in a clear and accurate way, while a 0:07:54.640 --> 0:07:58.760 cross pressure favor self deception, especially self deception in the 0:07:58.800 --> 0:08:02.520 form of overconfidence. For example, you might be more likely 0:08:02.600 --> 0:08:06.560 to survive if you have accurate assessments of your own abilities, 0:08:06.880 --> 0:08:09.600 but you might be more likely to take big risks 0:08:09.680 --> 0:08:14.560 with potentially big rewards if you overestimate your abilities or 0:08:14.640 --> 0:08:17.920 self delusional. Over confidence could be adaptive because it helps 0:08:18.040 --> 0:08:22.920 us persuade or even deceive other people about our worth. Yeah. 0:08:22.640 --> 0:08:25.080 You ultimately you have to you have to believe in 0:08:25.080 --> 0:08:27.840 yourself if you know other people are not going to 0:08:27.920 --> 0:08:30.280 believe in you for you, right right. I mean we 0:08:30.280 --> 0:08:32.840 we talked in the last episode about how it's probably 0:08:32.880 --> 0:08:36.680 not a coincidence that you really often notice over confidence 0:08:36.720 --> 0:08:40.440 in people who occupy high status leadership roles. How they 0:08:40.480 --> 0:08:42.560 get there. I mean, it's not hard to imagine the 0:08:42.600 --> 0:08:45.600 overconfidence help to them get to that point. Yeah, and 0:08:45.640 --> 0:08:48.679 it's uh sometime it's a fun, sometimes terrifying exercise to 0:08:48.840 --> 0:08:52.000 like if you if you engage with people like this 0:08:52.080 --> 0:08:54.920 and then when you realize, oh, they're just really overconfidence. 0:08:55.160 --> 0:08:57.360 They don't they're they're not to say they're not skilled, 0:08:57.559 --> 0:09:00.880 but when you realize unless they're not, sometimes they're not. 0:09:00.920 --> 0:09:03.240 But sometimes you really you realize, oh, there there is 0:09:03.280 --> 0:09:07.240 this gap between ability and uh and and and what 0:09:07.280 --> 0:09:09.760 they're they're saying they're going to deliver on, or what 0:09:09.800 --> 0:09:12.880 they are estimating the future will consist of. Yeah, I mean, 0:09:14.440 --> 0:09:17.120 it is kind of shocking how often in life you 0:09:17.200 --> 0:09:20.200 will suddenly come to a realization that, you know, the 0:09:20.280 --> 0:09:23.040 boss or the leader or whatever's main skill is b 0:09:23.240 --> 0:09:25.840 essing like that they can just go out there and 0:09:25.840 --> 0:09:27.880 wing it in a way that you would be too 0:09:27.880 --> 0:09:31.400 timid and reserve to do. Right now, this idea of 0:09:31.480 --> 0:09:34.559 you know, accurate assessments playing into our our own abilities, 0:09:35.520 --> 0:09:37.840 I couldn't help but think of the film Butch casting 0:09:37.920 --> 0:09:42.280 the Sundance Kid in this scenario, because it really as 0:09:42.320 --> 0:09:45.120 it relates to two specific points in the film. One 0:09:45.240 --> 0:09:47.440 is the whole would you make that jump if you 0:09:47.440 --> 0:09:50.840 didn't have to scenario where they're being tracked, they're being hunted, 0:09:51.200 --> 0:09:54.520 and they've come to this, uh, this this cliff overlooking 0:09:54.600 --> 0:09:58.199 this river, and they realize that if they jump, if 0:09:58.200 --> 0:09:59.839 they jump off this cliff and they land in that 0:10:00.080 --> 0:10:04.040 river and they don't die, they'll get away because the 0:10:04.080 --> 0:10:07.240 stakes are such that those pursuing them will not following them. 0:10:07.280 --> 0:10:09.480 They will not make that jump if they don't need to. 0:10:10.320 --> 0:10:14.480 Um So, so so there's there's that, and then at 0:10:14.520 --> 0:10:16.640 the very end there's kind of a going out the 0:10:16.679 --> 0:10:19.760 old fashioned way guns ablazing scenario where they're cornered, they're 0:10:19.760 --> 0:10:22.280 going to slowly be killed and they decided to just 0:10:22.320 --> 0:10:27.439 go for it, to just bust out shooting and just fight. Right. So, 0:10:27.440 --> 0:10:31.600 so the incentives, like the evolutionary incentives on a brain 0:10:31.720 --> 0:10:36.559 generating accurate pictures of the world versus self deluded over confidence, 0:10:36.920 --> 0:10:39.520 those could very well be just the contrast between a 0:10:39.600 --> 0:10:43.120 low risk, low reward strategy versus a high risk, high 0:10:43.200 --> 0:10:46.040 reward strike, right, yeah, so yeah, the first example definitely 0:10:46.120 --> 0:10:48.839 high risk, high reward, Like it was pretty much their 0:10:48.920 --> 0:10:52.920 only their best option for survival at that point, and 0:10:52.960 --> 0:10:56.120 they took it, and in the film they survive. At 0:10:56.120 --> 0:10:58.199 the end of the film, it's pretty much implied that 0:10:58.240 --> 0:11:02.360 they die, but but at the same time, it's it 0:11:02.440 --> 0:11:04.600 still seems to be their best option, if not their 0:11:04.640 --> 0:11:08.560 best option for surviving. It's kind of at least like 0:11:08.600 --> 0:11:11.240 the psychological best option. You know, we're we're gonna stay 0:11:11.280 --> 0:11:13.400 in here and die like rats, or are we gonna 0:11:13.840 --> 0:11:16.280 you know, just burst out there and uh, you know 0:11:16.400 --> 0:11:19.920 die like heroes in a film that is named after them. 0:11:19.960 --> 0:11:22.120 You know, man, that's a great movie. I want to 0:11:22.160 --> 0:11:24.920 go back, and why I haven't seen it? I remember 0:11:24.960 --> 0:11:26.440 except the end. I mean, the ending is kind of 0:11:26.440 --> 0:11:30.000 a downer, but uh but yeah, it's it's it's surprisingly 0:11:30.040 --> 0:11:33.199 sweet for a for a violent outlaw movie. Yeah, it's 0:11:33.240 --> 0:11:35.560 a good one. And you know, I mentioned him Inbeth 0:11:35.600 --> 0:11:37.760 earlier in the whole idea of you know, draping himself 0:11:37.760 --> 0:11:41.280 in prophecy and using that to to to to pump 0:11:41.360 --> 0:11:44.240 himself up. But that doesn't bring up bring to mind 0:11:44.320 --> 0:11:46.320 the rule of religion and all of this, you know, 0:11:46.400 --> 0:11:49.520 I mean, certainly a lot of the things that religion 0:11:49.720 --> 0:11:55.400 can do to your estimation of ability or you know, uh, 0:11:55.760 --> 0:11:58.559 you know, you can revolve around you know, the survivability 0:11:58.600 --> 0:12:00.880 of the soul for example, pull you know, and like 0:12:01.120 --> 0:12:04.520 what will happen if I act a certain way in life? Yeah, 0:12:04.559 --> 0:12:07.520 and I think there could possibly be cross pressures going 0:12:07.800 --> 0:12:09.920 the same way with that, I mean that that there 0:12:09.920 --> 0:12:13.760 are some evolutionary drawbacks and some some advantages to it, right. 0:12:13.800 --> 0:12:17.679 And then of course that's not to say that religious motivations, uh, 0:12:17.679 --> 0:12:20.920 you know exist free of social of course. I guess 0:12:21.040 --> 0:12:23.000 you know, there's going to be a rich interplay between 0:12:23.040 --> 0:12:25.600 those and that's you know, that's something that comes up, 0:12:25.640 --> 0:12:28.360 for instance, in UM when you look at studies of say, 0:12:28.400 --> 0:12:32.200 suicide bombers. You know where on one hand, you can 0:12:32.200 --> 0:12:34.240 look at it and just go with the simple scenario 0:12:34.280 --> 0:12:36.559 of oh, here's a person who believes that if they 0:12:36.600 --> 0:12:39.760 die doing this act then they'll be rewarded in the afterlife. 0:12:40.000 --> 0:12:42.840 But then behind that there's a whole social scenario as 0:12:42.920 --> 0:12:47.360 well of other humans, you know, telling them that this 0:12:47.440 --> 0:12:50.960 is the thing to do, etcetera. Yeah, motivations are are 0:12:51.040 --> 0:12:54.400 a rich stew of many different influences. I mean it's 0:12:54.480 --> 0:12:58.079 usually hard to nail down a single inciting incident or 0:12:58.160 --> 0:13:01.600 cause that lead people down a path in life. And 0:13:01.600 --> 0:13:03.120 in fact, I think a lot of times even when 0:13:03.120 --> 0:13:05.480 people do that with themselves and say this was the 0:13:05.520 --> 0:13:08.079 reason I became or whatever I did whatever, I think 0:13:08.080 --> 0:13:10.000 a lot of times they're over some they're they're wrong 0:13:10.040 --> 0:13:14.880 about themselves. So basically self delusion, we're all just houses 0:13:14.920 --> 0:13:18.800 of cards. I'm just ready to be knocked down at 0:13:18.840 --> 0:13:21.480 any point. Well, but there's another way of putting it. Now. 0:13:21.559 --> 0:13:23.439 One thing you and I could be getting wrong here 0:13:23.520 --> 0:13:27.680 is if we're talking properly about self delusion or some 0:13:27.840 --> 0:13:31.439 other type of bias or like misperception in the brain, 0:13:31.840 --> 0:13:36.240 because the authors here they're saying, okay, self delusion specifically, 0:13:36.720 --> 0:13:40.360 maybe self delusion implies that there's there's a sort of 0:13:40.440 --> 0:13:43.480 transformation going on somewhere in the brain, like the brain 0:13:43.640 --> 0:13:47.680 gets accurate information about the world and then just somehow 0:13:47.760 --> 0:13:51.160 presents it to the conscious mind in a skewed way. 0:13:51.360 --> 0:13:53.720 The authors share think that, especially if you're talking about 0:13:53.720 --> 0:13:57.080 wishful thinking, is the brand of self delusion, uh, you know, 0:13:58.000 --> 0:14:00.840 getting false perceptions about the world in or to feel better. 0:14:00.920 --> 0:14:03.520 They think that doesn't really work from a like unconscious 0:14:03.520 --> 0:14:07.319 mind to conscious mind model, because emotions and moods also 0:14:07.400 --> 0:14:09.920 seem to emerge from the unconscious mind, not from the 0:14:09.920 --> 0:14:13.120 conscious mind. But then there's another thing they go to, 0:14:13.480 --> 0:14:16.560 which is that they argue the empirical evidence for true 0:14:16.600 --> 0:14:20.800 self deception in overestimation it's actually kind of weak and 0:14:20.880 --> 0:14:24.040 kind of mixed. Why would this be, Well, first of all, 0:14:24.080 --> 0:14:27.360 they say, it's hard to separate true self deception from 0:14:27.400 --> 0:14:31.440 attempts to deceive others, including the researchers. So how can 0:14:31.520 --> 0:14:36.640 you tell when somebody truly overestimates their own traits or 0:14:36.640 --> 0:14:41.040 abilities versus they just tell you that they think their 0:14:41.280 --> 0:14:43.760 traits or abilities are better than they are. In a 0:14:43.760 --> 0:14:48.400 lot of cases, both would manifest equally as outward over confidence. Now, 0:14:48.440 --> 0:14:50.840 you can come up with some methodologies and some tests 0:14:50.840 --> 0:14:52.760 to try to get around this, Like you can make 0:14:52.840 --> 0:14:56.960 people bet sums of money that would where the outcome 0:14:57.000 --> 0:14:59.240 of the bet would be dependent on how good they 0:14:59.240 --> 0:15:02.360 actually are at a task or something. But in a 0:15:02.360 --> 0:15:04.080 lot of cases, they say, it's hard to tell the 0:15:04.080 --> 0:15:08.840 difference between true self deception and just attempts to deceive 0:15:08.960 --> 0:15:11.440 other people. Another thing they point out is that you 0:15:11.480 --> 0:15:16.480 don't actually have to be deceiving yourself to overestimate your abilities. 0:15:16.840 --> 0:15:20.680 You could be genuinely completely ignorant of the fact that 0:15:20.720 --> 0:15:23.240 you're not as good as you think you are. Uh. 0:15:23.280 --> 0:15:26.480 And here's one place that the famous Dunning Krueger effect 0:15:26.560 --> 0:15:29.720 comes in. Now you may have heard about the Dunning 0:15:29.800 --> 0:15:33.160 Krueger effect, but very short sketch on it. Of course, 0:15:33.240 --> 0:15:35.200 overlaps with a lot of what we're talking about today. 0:15:35.720 --> 0:15:40.080 Participants less skilled in a task or subject area can 0:15:40.080 --> 0:15:44.280 be prone to show even greater overestimation of their abilities 0:15:44.320 --> 0:15:47.760 in that skill or subject area. So with some skills, 0:15:47.960 --> 0:15:52.720 the worst you are, the more you overestimate your awesomeness. Now, 0:15:52.880 --> 0:15:55.160 why why on earth would this be Well, the authors 0:15:55.160 --> 0:15:58.040 here mentioned this could just simply come from your low 0:15:58.200 --> 0:16:01.920 skills providing you with a or frame of reference. You 0:16:02.000 --> 0:16:05.920 don't know enough about this task or skill or subject 0:16:05.960 --> 0:16:10.000 area to even understand how much you don't know, So, 0:16:10.120 --> 0:16:13.240 like the Dunning Kruger effect would show not self deception 0:16:13.560 --> 0:16:18.000 but genuine ignorance. You lack enough information to understand how 0:16:18.040 --> 0:16:21.200 bad you're failing. Like I think a good example of 0:16:21.240 --> 0:16:23.680 this is you know, you read you you read one 0:16:23.800 --> 0:16:28.080 theory about some phenomena and uh, and it can be 0:16:28.160 --> 0:16:30.760 rather convincing. It can be so convincing that you think, well, 0:16:30.800 --> 0:16:33.360 this is it. It made a great case. But if 0:16:33.360 --> 0:16:35.240 you don't, if if you don't actually look at some 0:16:35.280 --> 0:16:38.280 of the other theories out there or look at uh, 0:16:38.320 --> 0:16:40.640 you know, some sort of if you look at writings 0:16:40.760 --> 0:16:43.600 or or pieces that actually compare them, or do some 0:16:43.640 --> 0:16:46.520 sort of meta analysis, then you don't really have a 0:16:46.520 --> 0:16:49.040 proper frame of reference or even like sort of I 0:16:49.040 --> 0:16:51.480 wouldn't even say like nothing like a perfect frame of reference, 0:16:51.480 --> 0:16:53.600 but even say like a healthy frame of reference. Yes, 0:16:53.720 --> 0:16:56.280 you can go so like, you read one article about 0:16:56.280 --> 0:16:58.600 a subject and then you're an expert, and then you 0:16:58.600 --> 0:17:02.160 start reading more and you realize like, oh wait a minute, 0:17:02.160 --> 0:17:04.480 you know there's so much I don't understand that your 0:17:04.600 --> 0:17:08.000 estimation of your own expertise drops sharply after Yeah, like 0:17:08.000 --> 0:17:10.480 you might realize, oh, well, there are other theories, or 0:17:10.520 --> 0:17:13.240 you might realize, oh well, this was just one person's 0:17:13.280 --> 0:17:16.479 summary of this particular theory. And oh and then on 0:17:16.520 --> 0:17:18.919 top of that, perhaps they had a particular acts to 0:17:18.960 --> 0:17:22.040 grind in writing it, etcetera. Yeah, that that's a great example. 0:17:22.080 --> 0:17:24.080 I mean not to say that you should doubt everything 0:17:24.200 --> 0:17:26.200 you read, but I mean, yeah, you should have. You 0:17:26.200 --> 0:17:29.600 should you should have healthy doubt, not you know, not denialism, 0:17:30.000 --> 0:17:33.040 but but you know, just be aware that you don't 0:17:33.040 --> 0:17:36.680 know everything, and you should be especially suspicious when you 0:17:36.760 --> 0:17:40.359 have dipped your toes into a subject and now feel 0:17:40.400 --> 0:17:43.119 that you fully understand it. And we say that as 0:17:43.200 --> 0:17:48.160 a professional toe dippers. Uh. Now, finally they point out 0:17:48.160 --> 0:17:51.840 that the empirical evidence for wishful thinking itself in general 0:17:51.880 --> 0:17:55.880 as a psychological phenomenon. They say, this is not actually strong. Uh, 0:17:55.920 --> 0:17:59.320 if if there were strong evidence for wishful thinking. Wouldn't 0:17:59.359 --> 0:18:03.119 it be the case that more desirable outcomes would be 0:18:03.200 --> 0:18:07.480 more strongly believed, And they say, no, studies that try 0:18:07.520 --> 0:18:09.480 to test this out do not find this to be 0:18:09.560 --> 0:18:11.760 the case. It's not the case that the more you 0:18:11.800 --> 0:18:14.119 want something, the more you believe it to be true. 0:18:14.560 --> 0:18:17.600 And there are only a few types of scenarios where 0:18:17.640 --> 0:18:20.480 there's any evidence of this at all, such as scenarios 0:18:20.480 --> 0:18:23.840 where all outcomes are equally likely, like a dice roll 0:18:24.040 --> 0:18:26.399 or something. Now that is interesting to think of in 0:18:26.520 --> 0:18:30.200 terms of dungeons and dragons, were frequently one is either 0:18:30.240 --> 0:18:32.919 making an attack or doing some sort of attempting some 0:18:33.000 --> 0:18:36.040 sort of act that requires a skill check. And I 0:18:36.080 --> 0:18:39.280 find myself doing this. You'll, you go up there and 0:18:39.320 --> 0:18:41.880 you begin to explain what your character is going to do, 0:18:42.160 --> 0:18:44.760 as if you hit that natural twenty that's kind of 0:18:44.800 --> 0:18:47.800 the Yeah. So I find myself engaging in a lot 0:18:47.840 --> 0:18:51.360 of that level of overconfidence with my character because ultimately 0:18:51.359 --> 0:18:53.520 it all comes down to the roll of the dice, 0:18:53.920 --> 0:18:57.160 you know, unless I'm trying to you know, leap off 0:18:57.200 --> 0:18:59.360 of the democ organ's head or something that is going 0:18:59.400 --> 0:19:02.879 to be extremely difficult because they're going to be additional 0:19:03.000 --> 0:19:06.800 numerical you know values. Uh, you know added is attracted 0:19:06.840 --> 0:19:09.000 from the attempt. You know, ultimately it's still gonna be 0:19:09.040 --> 0:19:11.879 one to twenty one being h you know, a pretty 0:19:11.960 --> 0:19:14.560 much complete fail. Uh. You know that's gonna be the 0:19:14.560 --> 0:19:17.359 one where you slip and stab yourself with your own sword, 0:19:17.800 --> 0:19:19.679 or it's gonna be that natural twenty which is going 0:19:19.720 --> 0:19:22.239 to be you know, the wonder hit where you do 0:19:22.320 --> 0:19:25.919 extra damage. That is a fantastic example. I I was 0:19:25.960 --> 0:19:29.159 trying to think of cases where I thought I really 0:19:29.280 --> 0:19:31.920 did engage in wishful thinking, and I couldn't think. I'm 0:19:31.920 --> 0:19:34.720 sure I do sometimes, but yeah, they say it's not 0:19:34.800 --> 0:19:37.280 actually as common as people think it is. And here's 0:19:37.320 --> 0:19:39.520 maybe one case. I think in Dungeons and Dragons, I 0:19:39.920 --> 0:19:42.240 have yet to meet a player or be a player 0:19:42.640 --> 0:19:45.160 that does not engage in will wish will thinking. Every 0:19:45.200 --> 0:19:47.560 time you roll the dice, like nobody, nobody rolls that 0:19:47.640 --> 0:19:49.320 dice and it says, all right, this is how I'm 0:19:49.320 --> 0:19:52.920 gonna fall off this table or this is how I'm 0:19:52.920 --> 0:19:56.560 going to fall into the next trap, and you know, 0:19:56.720 --> 0:19:59.960 and skewer myself on a stake. No, we want the 0:20:00.040 --> 0:20:02.400 best outcome and we we have it in our mind 0:20:02.520 --> 0:20:06.119 before the dice puts this in our place. Now, another 0:20:06.200 --> 0:20:10.000 thing that the authors here bring up is that overestimation itself. 0:20:10.080 --> 0:20:12.560 Remember again, that's just thinking that you are better than 0:20:12.600 --> 0:20:15.000 you are in some way in terms of abilities or 0:20:15.040 --> 0:20:18.760 traits or something. Um that this actually has a mixed 0:20:18.760 --> 0:20:22.320 evidential record. It's not always the case that we overestimate 0:20:22.359 --> 0:20:25.720 ourselves on all qualities or tasks. It's more the case 0:20:25.800 --> 0:20:28.040 for some things in particular. And they give a couple 0:20:28.040 --> 0:20:30.960 of examples of things where there really is a ton 0:20:31.040 --> 0:20:34.800 of evidence for consistent overestimation. One is something you brought 0:20:34.880 --> 0:20:38.680 up in the last episode, Robert, the planning fallacy. There 0:20:38.800 --> 0:20:43.720 is really good evidence that people consistently overestimate how fast 0:20:43.800 --> 0:20:46.800 they'll be able to get things done or complete a 0:20:46.840 --> 0:20:50.560 project of some kind. And this is especially true if 0:20:50.600 --> 0:20:54.360 the project is difficult and novel. So like, if I 0:20:54.359 --> 0:20:56.560 I try to, you know, I put together some complex 0:20:56.600 --> 0:20:58.680 thing for you to do that's hard and you've never 0:20:58.720 --> 0:21:02.919 done it before, you are really likely to massively underestimate 0:21:02.960 --> 0:21:04.840 how much time it's going to take you. Right if 0:21:04.840 --> 0:21:06.920 you're like, well, you know, I'm not a handyman, but 0:21:07.040 --> 0:21:10.560 I think I'm gonna install this sink myself and then 0:21:10.600 --> 0:21:14.679 you watch a weekend just vanish. Yeah, I know that feeling. 0:21:15.359 --> 0:21:18.120 Another one that they site is the illusion of control. 0:21:18.240 --> 0:21:22.560 People pretty consistently overestimate how much control they, well they 0:21:22.600 --> 0:21:26.000 will have over future outcomes, even things that that they 0:21:26.000 --> 0:21:31.080 should understand are basically random. Right. You see this financially 0:21:31.200 --> 0:21:33.840 in business wise a lot of times where someone will 0:21:33.880 --> 0:21:36.399 have they think they have a clear idea of like 0:21:36.440 --> 0:21:38.600 how things are going to flow, but they're they're just 0:21:38.680 --> 0:21:42.560 not taking into account all the factors they cannot control, 0:21:43.200 --> 0:21:46.760 and say the economy or or or or just the 0:21:47.080 --> 0:21:49.840 industry that they're a part of. But they're kind of 0:21:49.920 --> 0:21:52.719 they're acting, they're making choices based on sort of like 0:21:52.760 --> 0:21:55.320 a not even a best case scenario, but sort of 0:21:55.320 --> 0:21:58.760 like a standard scenario. You know, Yeah, I think I 0:21:58.760 --> 0:22:00.560 know what you mean. Like they're they're not counting on 0:22:00.600 --> 0:22:02.920 the storm, and they're also not counting on the wind 0:22:02.920 --> 0:22:06.240 to completely die away, and that's how they're basing, you know, 0:22:06.280 --> 0:22:08.240 their their estimate of how long it's going to take 0:22:08.280 --> 0:22:10.920 to sail across the sea. Oh yeah, I mean that 0:22:11.040 --> 0:22:13.879 that's another thing, like we there's actually a name for this. 0:22:13.920 --> 0:22:16.000 I've forgotten it at the moment, but maybe I'll call 0:22:16.040 --> 0:22:18.240 it to mind in a second. But uh, it's the 0:22:18.240 --> 0:22:21.080 the assumption that the future will be like the present. 0:22:21.600 --> 0:22:26.000 Maybe it's called the continuation fallacy or um. But now 0:22:26.040 --> 0:22:28.080 there's one more thing that they bring up with respect 0:22:28.119 --> 0:22:32.600 to overestimation specifically, uh, and this is a standard finding 0:22:32.640 --> 0:22:35.399 that applies to a lot of the research on overestimation. 0:22:35.680 --> 0:22:40.120 It's called the hard easy distinction or the hard easy effect. 0:22:40.600 --> 0:22:43.119 And UH, this one is interesting because we'll see some 0:22:43.200 --> 0:22:45.919 variations with it in other types of overconfidence. But it 0:22:45.960 --> 0:22:49.600 goes like this, we are more likely to overestimate our 0:22:49.640 --> 0:22:54.679 abilities on hard tasks and underestimate our abilities on easy ones. 0:22:55.640 --> 0:22:59.280 So again, like the hard project comes up with the 0:22:59.320 --> 0:23:03.280 planning foul. See, you massively underestimate how much time it's 0:23:03.280 --> 0:23:06.320 going to take you to do that hard, complex novel thing, 0:23:06.720 --> 0:23:09.240 but then you might overestimate how much time it's going 0:23:09.280 --> 0:23:12.159 to take you to do something that's a common easy task. 0:23:12.960 --> 0:23:14.800 I guess that the main example that's coming to mind 0:23:14.800 --> 0:23:18.399 on this one would be the scenario where driving across 0:23:18.480 --> 0:23:22.040 town are going to a particular destination takes less time 0:23:22.040 --> 0:23:23.840 than you think it will and then you show up 0:23:23.920 --> 0:23:27.000 like fifteen minutes early yea or or worse yeah. And 0:23:27.200 --> 0:23:30.359 the authors here have some explanations for how exactly this 0:23:30.400 --> 0:23:31.800 is working that we'll get to an abid who we 0:23:31.800 --> 0:23:33.760 take a break, Yes, we should, and when we come 0:23:33.760 --> 0:23:40.119 back we will continue our journey through over confidence. Thank alright, 0:23:40.119 --> 0:23:42.680 we're back. All right. So we've been talking about this 0:23:42.720 --> 0:23:46.120 paper about over confidence, but the three types of overconfidence 0:23:46.200 --> 0:23:49.320 by shots and more. We were just talking about overestimation, 0:23:49.400 --> 0:23:51.479 the belief that you're better than you are, especially with 0:23:51.560 --> 0:23:55.240 respect to some kind of objective measure or independent measure. 0:23:55.600 --> 0:23:57.440 And so we want to move on to the next 0:23:57.520 --> 0:24:00.760 type of overconfidence they talk about, which is over placement. 0:24:00.840 --> 0:24:03.719 And again this is different from overestimation because this is 0:24:04.160 --> 0:24:07.439 thinking that you're better than you are with respect to 0:24:07.520 --> 0:24:11.240 other people and judging yourself compared to others. Now, the 0:24:11.280 --> 0:24:14.920 authors have some methodological critiques of some of the literature here, 0:24:14.920 --> 0:24:17.680 but they acknowledge there's a lot of evidence for overplacement, 0:24:18.000 --> 0:24:21.200 citing the better than average effect in all its beastly forms, 0:24:21.240 --> 0:24:23.600 Like in the other paper that we talked about that 0:24:23.680 --> 0:24:27.240 was you know, recently found to be extremely robust. Uh 0:24:27.440 --> 0:24:30.120 they've got some quibbles about methodology and some of these 0:24:30.119 --> 0:24:34.040 studies like using ambiguous scales or measures. Robert, you were talking, 0:24:34.080 --> 0:24:36.320 I think in the last episode about you know how 0:24:36.359 --> 0:24:38.600 some of these types of things like uh, you know, 0:24:38.680 --> 0:24:43.440 how people rate themselves in terms of attractiveness or intelligence 0:24:43.560 --> 0:24:46.919 or something. These can of course suffer from ambiguous criteria, 0:24:47.200 --> 0:24:51.480 right yeah, or sometimes just straight up unfair criteria, racist criteria, um, 0:24:51.600 --> 0:24:56.120 misogynistic criteria, etcetera. Well, yeah, it absolutely has all those 0:24:56.160 --> 0:24:59.360 negative effects. I mean, I think overplacement is like it's 0:24:59.400 --> 0:25:01.399 behind a lot of the worst types of prejudices that 0:25:01.440 --> 0:25:04.800 make themselves known. But even if you're just like looking 0:25:04.800 --> 0:25:07.840 at what is the quality you're trying to measure, you know, 0:25:08.359 --> 0:25:11.679 attractiveness or something like that, that there's usually not like 0:25:11.880 --> 0:25:14.320 a way of rating that is it's all based on 0:25:14.359 --> 0:25:18.159 these kind of ambiguous subjective judgments. One great example of 0:25:18.200 --> 0:25:20.880 this is something that we've brought up several times already, 0:25:20.960 --> 0:25:25.960 like the driving example. So Vinson in one did a 0:25:26.000 --> 0:25:30.720 study where he discovered that nine percent of American drivers 0:25:30.840 --> 0:25:35.720 rated themselves above the median and driving ability. Obviously, whatever 0:25:35.880 --> 0:25:40.240 criterion you use, it's impossible for to be above the media, 0:25:40.240 --> 0:25:43.400 and it would have to be you know, like, um, 0:25:43.440 --> 0:25:46.280 the majority can be above average, but the majority cannot 0:25:46.359 --> 0:25:48.960 be above the median. And the authors point out this 0:25:48.960 --> 0:25:51.720 would be more impressive if it were more specific, because 0:25:52.119 --> 0:25:55.080 due to this problem with like ambiguous scales or measures, 0:25:55.400 --> 0:25:59.400 anybody could technically have their own definition of what makes 0:25:59.400 --> 0:26:02.080 a good drive. Ever, so you could be answering that 0:26:02.200 --> 0:26:04.640 thinking like, well, there are things that I do well 0:26:04.760 --> 0:26:07.639 when I drive, and maybe they're different from what somebody 0:26:07.640 --> 0:26:09.879 else thinks that they do well when they drive, and 0:26:09.920 --> 0:26:13.280 that's their criterion, right, I mean, your your definition of 0:26:13.320 --> 0:26:15.560 being a good driver could just be I did not 0:26:16.040 --> 0:26:17.400 you know, I wasn't in a wreck on the way 0:26:17.440 --> 0:26:19.520 to work this morning, you know. Or or it could 0:26:19.560 --> 0:26:22.840 be I get the places I need to go fast, yeah, 0:26:22.880 --> 0:26:25.800 like in those are those are are definitely you know, 0:26:25.920 --> 0:26:29.040 not necessarily the same vision of good driving. Or I 0:26:29.080 --> 0:26:32.480 look really cool when I do it, you know. Uh. 0:26:32.520 --> 0:26:34.760 There's another thing they bring up which is interesting, which 0:26:34.800 --> 0:26:39.359 is the role of self selection in increasing the apparent 0:26:39.520 --> 0:26:43.280 prevalence of overconfidence in the real world. So an example 0:26:43.320 --> 0:26:47.480 would be like this, On average, more overconfident people are 0:26:47.560 --> 0:26:50.639 likely to apply for jobs just sort of by definition, right, 0:26:51.400 --> 0:26:54.880 more overconfident people are likely to start businesses, to run 0:26:54.920 --> 0:26:59.639 for office, So we're we're exposed to more of these people, 0:27:00.200 --> 0:27:03.480 and this could lead to us thinking that their confidence 0:27:03.600 --> 0:27:06.760 level is more represented in the general population than it 0:27:06.840 --> 0:27:09.720 actually is. Oh yeah, you turn onto television. It's what 0:27:09.800 --> 0:27:13.439 it's almost exclusively overly confident people. That's true. Yeah, So 0:27:13.480 --> 0:27:17.840 if you just look at like business leadership, politics, celebrities, 0:27:18.760 --> 0:27:20.919 all this, you're gonna see. I think you will see 0:27:20.960 --> 0:27:24.479 in general way more over confidence than you just will 0:27:24.720 --> 0:27:27.680 talking to your friends and relatives and co workers. Now 0:27:27.720 --> 0:27:30.199 here's a really interesting thing. Remember we talked about the 0:27:30.320 --> 0:27:34.359 hard easy effect or the easy heart effect with overestimation, 0:27:34.359 --> 0:27:39.520 where people tend to overestimate their abilities on hard jobs 0:27:39.560 --> 0:27:44.760 and underestimate their abilities on easy jobs. Apparently, for overplacement, 0:27:45.400 --> 0:27:48.200 it's there's also an easy heart effect, but it's in 0:27:48.240 --> 0:27:54.520 the exact opposite direction. With overplacement, you overplace yourselves relative 0:27:54.680 --> 0:27:58.520 We overplace ourselves relative to others on easy, common tasks 0:27:58.880 --> 0:28:02.960 and underplace our selves relative to others on difficult, unusual, 0:28:03.200 --> 0:28:06.240 or rare ones. So again, what would be some examples 0:28:06.280 --> 0:28:09.399 of this? Uh, you think you're in the ninety percentile 0:28:09.480 --> 0:28:12.080 of drivers, but really you're in the fort This is 0:28:12.119 --> 0:28:16.000 an easy, common task. On the other hand, people think 0:28:16.080 --> 0:28:20.680 that they are less likely than others to win difficult competitions. Uh. 0:28:20.720 --> 0:28:23.840 Studies show that when there's a teacher that decides to 0:28:24.160 --> 0:28:27.560 make an exam harder and graded on a curve, students 0:28:27.600 --> 0:28:30.880 expect their grades to be worse than others, even when 0:28:30.920 --> 0:28:33.040 there's common knowledge that there will be a curve, So 0:28:33.080 --> 0:28:36.240 as the test gets harder, students perceived that they will 0:28:36.280 --> 0:28:40.920 do worse relative to other classmates. That's kind of interesting. Uh. 0:28:40.960 --> 0:28:43.840 They point out that people believe they are worse jugglers 0:28:43.920 --> 0:28:47.200 than other people. They believe that they are less likely 0:28:47.280 --> 0:28:49.960 to win the lottery than other people. Again a difficult, 0:28:50.040 --> 0:28:54.240 rare thing, uh, And that they here's here's a very 0:28:54.240 --> 0:28:57.600 interesting version. Just in terms of ages. People believe they 0:28:57.600 --> 0:29:01.400 are less likely than other people to of past one hundred, 0:29:01.800 --> 0:29:04.560 But they also think they're more likely than other people 0:29:04.640 --> 0:29:08.440 to live past seventy Interesting. Well, of course, both of 0:29:08.440 --> 0:29:10.440 those kind of depends on where you are in the 0:29:10.480 --> 0:29:13.280 age spectrum when you're making that estimation, you know, because 0:29:13.280 --> 0:29:16.200 you could be I mean, I mean, but apparently it's 0:29:16.200 --> 0:29:19.440 true of all age. Yeah, but also your quality of life, right, 0:29:19.440 --> 0:29:22.240 I mean for some people that prospect of living two hundred, 0:29:22.760 --> 0:29:25.840 depending on where you are healthwise, that might be terrifying. 0:29:25.920 --> 0:29:29.080 That might be it might be wishful thinking that you'll 0:29:29.120 --> 0:29:31.920 expire sooner than that. Uh, or it could be the 0:29:31.920 --> 0:29:35.160 other way around. You know. Um, what kind of explanations 0:29:35.160 --> 0:29:38.280 are they they're throwing out? Yeah, this was interesting? So yeah, 0:29:38.320 --> 0:29:40.840 why do we fail in opposite directions here? Depending on 0:29:40.880 --> 0:29:44.480 whether we're imagining our performance against objective measures versus relative 0:29:44.520 --> 0:29:47.560 to others and the author's site solutions from some of 0:29:47.640 --> 0:29:52.280 Moore's previously previous work with other authors, They write this quote. 0:29:52.520 --> 0:29:55.880 If people make any errors estimating how well they've done 0:29:56.080 --> 0:29:58.840 or will do, then it stands to reason they're more 0:29:58.880 --> 0:30:01.680 likely to over us to make a low score and 0:30:01.840 --> 0:30:05.360 more likely to underestimate a high score. That's the herd 0:30:05.440 --> 0:30:09.040 easy effect. As long as people have more uncertainty about 0:30:09.160 --> 0:30:12.520 other scores, they will tend to make even more regressive 0:30:12.640 --> 0:30:16.040 estimates of others than of self. The consequence would be 0:30:16.120 --> 0:30:20.040 that they overestimate others even more than themselves on difficult 0:30:20.080 --> 0:30:23.000 tasks and come to believe that they are worse than others. 0:30:23.400 --> 0:30:26.160 The opposite would hold true for easy tasks. People would 0:30:26.240 --> 0:30:30.040 underestimate others more than themselves and wind up believing that 0:30:30.080 --> 0:30:33.040 they are better than others. So that took me a 0:30:33.080 --> 0:30:34.840 minute to get my head around, but then I finally 0:30:34.880 --> 0:30:37.440 made sense of it. So when you're not sure how 0:30:37.520 --> 0:30:39.680 you will do it something, as we're always you know, 0:30:39.800 --> 0:30:42.840 not sure, there's a ton of uncertainty in life, or 0:30:43.000 --> 0:30:46.000 you're not sure how others will do they're simply more 0:30:46.080 --> 0:30:50.000 room for possibility to guess high if your performance is 0:30:50.040 --> 0:30:52.920 likely to be low, and more room to guess low 0:30:53.080 --> 0:30:55.920 if your performance is likely to be high. And this 0:30:55.960 --> 0:30:59.480 applies to both the self and other people. Since we 0:30:59.560 --> 0:31:02.960 know even less about other people than we do about ourselves, 0:31:03.200 --> 0:31:05.960 we're going to spend more time guessing wrong in these 0:31:06.080 --> 0:31:09.480 vast over and under zones for other people, depending on 0:31:09.560 --> 0:31:11.960 what type of task it is. Now we're going to 0:31:12.080 --> 0:31:15.880 talk about over precision from this two thousand seventeen study. Now, 0:31:15.920 --> 0:31:18.760 over precision again is that that's like having way more 0:31:18.800 --> 0:31:22.440 confidence than you should about what you believe to be true. 0:31:22.840 --> 0:31:24.440 So I could ask you, you know, I could ask 0:31:24.480 --> 0:31:26.320 you to answer a question that I could ask you 0:31:26.440 --> 0:31:30.080 how confident you are that your answer is correct. Uh. 0:31:30.160 --> 0:31:33.920 And the authors here right quote results routinely find that 0:31:34.080 --> 0:31:39.520 hit rates inside confidence intervals are below fifty percent, implying 0:31:39.560 --> 0:31:42.720 that people set their ranges too precisely, acting as if 0:31:42.760 --> 0:31:46.360 they're inappropriately confident that their beliefs are accurate. So if 0:31:46.360 --> 0:31:49.960 you take a quiz, you say you're more than confident 0:31:50.040 --> 0:31:52.360 on average about your answers, and you're actually more like 0:31:52.480 --> 0:31:56.040 fifty percent correct on average. This is something that's been 0:31:56.080 --> 0:31:59.280 found a bunch of times. It's quite clear that there's 0:31:59.360 --> 0:32:03.360 tons of over precision in human behavior. The authors have 0:32:03.360 --> 0:32:06.719 a few critiques about like common research paradigms that are 0:32:06.800 --> 0:32:09.600 used to study this. One example is they say, you know, 0:32:09.720 --> 0:32:11.920 it may be that normal people don't have a very 0:32:11.960 --> 0:32:14.959 solid understanding of how to use confidence intervals, so there 0:32:14.960 --> 0:32:18.320 have been other ways of trying to measure it. But however, 0:32:18.440 --> 0:32:21.520 the authors here believe that over precision is the most 0:32:21.640 --> 0:32:26.240 pervasive form of over confidence. You find it absolutely ever everywhere, 0:32:26.280 --> 0:32:29.520 even in experts talking about their own subject matter. I 0:32:29.520 --> 0:32:31.160 think that's come up on the show before that, I 0:32:31.160 --> 0:32:33.960 don't remember when. After this, the authors here turned to 0:32:33.960 --> 0:32:36.760 the question UH, a question we talked about a little before, 0:32:36.840 --> 0:32:40.800 could over confidence actually be useful? Like? How do why 0:32:40.800 --> 0:32:44.280 does it make sense for a brain to be over confident? Uh? 0:32:44.320 --> 0:32:47.440 And they talk about explanations in two main categories, intra 0:32:47.640 --> 0:32:52.200 personal and interpersonal. Uh. The authors generally think the evidence 0:32:52.240 --> 0:32:56.640 for the interpersonal explanations, the explanations and how it works 0:32:56.680 --> 0:33:00.320 on other people are stronger than the intra personal ones, 0:33:00.360 --> 0:33:03.880 though there could could be some good intrapersonal ones. For example, 0:33:04.320 --> 0:33:07.400 you know, maybe over confidence doesn't just make you feel good, it, 0:33:07.560 --> 0:33:11.040 as we hypothesized earlier, makes you more likely to take 0:33:11.160 --> 0:33:14.160 risks that can pay off big. Yeah. Well, I mean, 0:33:14.200 --> 0:33:16.400 for instance, to come to to go to like a 0:33:16.400 --> 0:33:22.160 predator prey scenario, like one is reminded of the you know, 0:33:22.200 --> 0:33:25.640 how effective your average predator is. You know they are 0:33:25.680 --> 0:33:29.520 going to fail a lot. And granted, a leopard is 0:33:29.560 --> 0:33:34.040 not really subject to human you know, over confidence or 0:33:34.120 --> 0:33:37.320 under confidence, but certainly, if you if you if you 0:33:37.360 --> 0:33:39.840 look at a human scenario, if you look at human hunters, 0:33:40.480 --> 0:33:42.640 you know it, it's certainly a situation where it would 0:33:42.640 --> 0:33:46.800 pay to be overconfident. Uh, to a certain degree. Yeah, 0:33:46.800 --> 0:33:49.360 I think you can find some analogies of confidence and 0:33:49.400 --> 0:33:52.120 over confidence and animals like, you know, how likely are 0:33:52.160 --> 0:33:55.400 you to try to take down prey animal that you're 0:33:55.480 --> 0:33:58.320 very unlikely to succeed against what you know would provide 0:33:58.320 --> 0:34:00.120 you with a lot of meat and energy of you 0:34:00.160 --> 0:34:02.720 do right. Of course, the reverse of the other side 0:34:02.760 --> 0:34:04.280 of that is that you would not need want to 0:34:04.280 --> 0:34:07.200 be so overconfident you were going after prey that was 0:34:07.240 --> 0:34:09.919 extremely likely to kill you if you try to bring 0:34:09.960 --> 0:34:12.879 it down. Right. But the authors here they do think 0:34:12.920 --> 0:34:17.040 that there's really good evidence for interpersonal benefits for over confidence. 0:34:17.560 --> 0:34:20.240 One example would be all the empirical evidence that already 0:34:20.239 --> 0:34:24.080 exists that just outwardly projecting confidence has all these benefits 0:34:24.080 --> 0:34:26.880 affecting how other people see us. There are studies that 0:34:26.960 --> 0:34:31.240 show that highly confident people are more persuasive, they're more influential, 0:34:31.560 --> 0:34:34.480 they're perceived as more sexually attractive, they tend to get 0:34:34.520 --> 0:34:38.480 promoted to positions of authority in groups um, and it's 0:34:38.520 --> 0:34:42.239 possible that confidence is actually more important than competence in 0:34:42.280 --> 0:34:46.560 determining who gets promoted to high status positions the author's 0:34:46.640 --> 0:34:49.640 right quote. While a preference for confident leaders may make 0:34:49.680 --> 0:34:54.120 sense if there's a correlation, however, weak between confidence and competence. 0:34:54.280 --> 0:34:58.160 There is real risk in selecting over confident leaders. Well, 0:34:58.200 --> 0:35:00.560 I mean because on one hand, you on a boss 0:35:00.680 --> 0:35:03.120 that can say, you know, do their job and and 0:35:03.200 --> 0:35:06.640 keep the company afloat and actually grow the business, etcetera, 0:35:06.680 --> 0:35:09.680 all the various catchphrases. But you also want a boss 0:35:09.719 --> 0:35:11.640 that you can kind of like you can you can 0:35:11.800 --> 0:35:13.920 you can trust that they're doing their thing like they 0:35:14.000 --> 0:35:17.600 seem confident. I guess they have their whole end of 0:35:17.640 --> 0:35:19.560 it figured out, and maybe I can focus on my 0:35:19.640 --> 0:35:22.240 own thing and not my own role in the company 0:35:22.280 --> 0:35:25.520 without you know, freaking out about what's going to happen tomorrow. Well, 0:35:25.560 --> 0:35:28.600 maybe in the business scenario we should pivot to talking 0:35:28.640 --> 0:35:32.000 about the Icarus paradox. Oh, all right, we're gonna take 0:35:32.000 --> 0:35:33.640 a quick break, but we'll be right back with more. 0:35:37.280 --> 0:35:39.759 And we're back. So, Robert, you wanted to bring in 0:35:39.800 --> 0:35:44.080 a concept from the business world about overconfidence, the Icarus paradox. Yeah, 0:35:44.239 --> 0:35:46.520 And I'm as surprised as maybe some of you are 0:35:46.560 --> 0:35:49.319 that I'm bringing in a something business wise, but it 0:35:49.360 --> 0:35:51.239 caught my attention when I was looking for things on 0:35:52.120 --> 0:35:55.000 for papers and so forth on over confidence, and also 0:35:55.160 --> 0:35:58.120 looking at Greek mythology and so forth, because yeah, the 0:35:58.160 --> 0:36:02.400 Acarus paradox invokes the story of Chris rather directly. And 0:36:02.440 --> 0:36:04.359 I think it also makes sense at another level because 0:36:04.400 --> 0:36:07.080 you know, we don't have gods uh so much anymore, 0:36:07.120 --> 0:36:11.800 Like these are not the driving commanding forces in our world. 0:36:12.200 --> 0:36:16.239 But we do have institutions, industries, global economies, and these 0:36:16.239 --> 0:36:19.000 are not unlike the concepts of the gods. Right. You know, 0:36:19.040 --> 0:36:22.560 they're sometimes lawful, sometimes chaotic entities that are likely to 0:36:22.640 --> 0:36:25.279 destroy you if you question their authority or if you 0:36:25.960 --> 0:36:29.000 you you turn against them. But anyway, I ran across 0:36:29.160 --> 0:36:32.920 this interesting concept of the Acress paradox um. It was 0:36:32.960 --> 0:36:36.799 devised by Canadian economist Danny Miller, and he points out 0:36:36.840 --> 0:36:40.839 that businesses are often like Icarus in the myth They 0:36:40.840 --> 0:36:46.000 start out confident and competent, they rise, but then they perish. Uh. 0:36:46.120 --> 0:36:48.440 The The irony, he writes, is that many of the 0:36:48.480 --> 0:36:52.839 most dramatically successful companies are prone to this exact sort 0:36:52.880 --> 0:36:56.520 of failure. Uh. And and it doesn't in the business sense, 0:36:56.560 --> 0:37:00.560 since businesses are sometimes less likely to they're more like 0:37:00.560 --> 0:37:03.120 the gods. You know, they're they have downfalls, but there 0:37:03.120 --> 0:37:06.720 may be they may very well be immortal. In some cases, 0:37:07.160 --> 0:37:09.240 they're still alive. They're just chained to a rock getting 0:37:09.239 --> 0:37:12.560 their liver pecked out by an eagle. Right for eternity. 0:37:12.600 --> 0:37:16.000 You know, maybe they just declare multiple bankruptcies. Immortal declares 0:37:16.040 --> 0:37:18.680 bankruptcy is a different thing than than a corporation doing it. 0:37:19.239 --> 0:37:22.000 Um wait, what is that eagle. It's like a private 0:37:22.080 --> 0:37:26.080 equity eagle. Yeah, the private equity eagle. Um yeah. He 0:37:26.080 --> 0:37:28.640 mentioned several companies and discussing this, and and most of them, 0:37:28.680 --> 0:37:30.440 I think that he was discussing, are still around, like 0:37:30.520 --> 0:37:34.320 they have survived their downfalls. Uh but yeah, yeah. He 0:37:34.360 --> 0:37:36.720 writes that the irony is that that many of these 0:37:36.840 --> 0:37:39.560 dramatically successful companies are prone to these sort of failures. 0:37:39.560 --> 0:37:42.759 And what's more, the very factors that drive success, when 0:37:42.760 --> 0:37:46.120 taken to excess, are the factors that bring about decline. 0:37:47.200 --> 0:37:49.440 So I think this is an interesting model to look at, 0:37:49.520 --> 0:37:51.640 not only for the you know, because it's a just 0:37:51.719 --> 0:37:53.279 a take on it from the business world, but I 0:37:53.320 --> 0:37:55.320 think he can also serve as sort of a reflecting 0:37:55.360 --> 0:37:58.600 pool for some of the individual concepts that we've discussed 0:37:58.640 --> 0:38:01.799 already by placing them outside of the human psyche and 0:38:01.840 --> 0:38:04.319 looking at them in the context of an organization or 0:38:04.320 --> 0:38:09.080 a culture. So Miller wrote a book about this, The 0:38:09.160 --> 0:38:12.920 Acarious Paradox. How exceptional companies bring about their own downfall, 0:38:13.280 --> 0:38:17.080 New Lessons in the dynamics of corporate success, decline, and renewal. 0:38:17.120 --> 0:38:19.960 I know you love a long title like that, um, 0:38:20.120 --> 0:38:24.200 but I also I was mainly looking at his Business 0:38:24.520 --> 0:38:27.440 Horizons article that he wrote on the subject, and he 0:38:27.480 --> 0:38:31.400 summarizes a lot of the key points. So Miller identified 0:38:31.560 --> 0:38:37.719 four key to trajectories in the richest to rags business scenario. 0:38:38.400 --> 0:38:41.800 So the first one that he mentions is the focusing trajectory. 0:38:41.840 --> 0:38:46.880 In this trajectory, the craftsman becomes the tinker. Quote firms 0:38:46.880 --> 0:38:54.080 whose insular, technocratic monocultures alienate customers with perfect but irrelevant offerings. 0:38:54.120 --> 0:38:56.319 So I guess in a scenario would be, you know, 0:38:56.800 --> 0:39:00.399 the company that creates a really groundbreaking product, and then 0:39:00.480 --> 0:39:04.120 all they do is tinker with that concept. All they 0:39:04.160 --> 0:39:07.960 do is make adjustments to that concept, and eventually, like 0:39:08.120 --> 0:39:10.520 somebody else is going to create a better widget or 0:39:10.560 --> 0:39:13.920 a better you know, smartphone, or whatever the situation may be, 0:39:14.400 --> 0:39:16.640 somebody else is going to take some some you know, 0:39:16.719 --> 0:39:21.440 some wider swings next comes the venturing trajectory, and this 0:39:21.520 --> 0:39:25.120 is by which builders become imperialist. And this one, I 0:39:25.160 --> 0:39:27.160 think is the one that really has the smack of 0:39:27.239 --> 0:39:31.920 overconfidence to it. In this trajectory, the strategy of building 0:39:32.120 --> 0:39:36.440 feeds into over expansion. The goal of growth becomes grandeur, 0:39:36.880 --> 0:39:41.400 and an entrepreneurial culture becomes one of the gamesman. A 0:39:41.480 --> 0:39:46.080 divisionalized structure becomes fractured. And then on top of that 0:39:46.120 --> 0:39:49.319 there's the the inventing trajectory. This is where you go 0:39:49.400 --> 0:39:53.040 from pioneering to escapist. In this trajectory, innovation feeds into 0:39:53.120 --> 0:39:58.640 high tech escapism. Science for society transforms into technological utopianism. 0:39:58.680 --> 0:40:01.319 Research and development gives way to think tank culture, and 0:40:01.360 --> 0:40:05.439 the overall culture goes from organic to chaotic. And then 0:40:05.600 --> 0:40:09.200 he rounds us out with the decoupling trajectory from salesman 0:40:09.320 --> 0:40:15.280 to drifter quote. Finally, the decoupling trajectory transforms salesman organizations 0:40:15.280 --> 0:40:19.520 with unparalleled marketing skills, prominent brand names, and broad markets 0:40:19.840 --> 0:40:24.880 into aimless, bureaucratic drifters whose sales fetish obscures design issues 0:40:25.080 --> 0:40:27.799 and who produce a stale and disjointed line of me 0:40:27.920 --> 0:40:31.040 too offerings. Okay, so that's the company that's more based 0:40:31.080 --> 0:40:34.279 around marketing culture than around having a good product, right. 0:40:34.400 --> 0:40:36.960 You know, thinking about these trajectories kind of reminds me 0:40:37.040 --> 0:40:40.520 of the peaking in high school stereotype in life trajectories. 0:40:41.000 --> 0:40:43.040 It's a stereotype, but there is some truth to it. 0:40:43.160 --> 0:40:45.880 I think it's possible that too much success early on 0:40:45.920 --> 0:40:48.520 in life can kind of corrupt a person, and can 0:40:48.560 --> 0:40:51.000 kind of corrupt your work ethic, your ability to learn 0:40:51.080 --> 0:40:54.560 from mistakes and mature. It's important for people to experience 0:40:54.600 --> 0:40:58.200 both successes and failures early in life. Yeah, yeah, I 0:40:58.440 --> 0:41:00.360 think so. It kind of comes act to what we 0:41:00.440 --> 0:41:05.160 talked about looking at considering Aristotle's uh summary of hubrists 0:41:05.200 --> 0:41:07.640 saying that the young and the rich were the most 0:41:07.680 --> 0:41:10.280 likely to engage in it, and the idea that perhaps 0:41:10.320 --> 0:41:13.680 in some scenarios, certainly there there are plenty of examples 0:41:13.680 --> 0:41:17.200 of very wealthy people who got there through defeat, like 0:41:17.280 --> 0:41:20.400 through learning the lessons of defeat. There are also examples 0:41:20.440 --> 0:41:23.400 of of people who have you know, arguably maybe you know, 0:41:23.880 --> 0:41:26.759 never suffered a true defeat like they have. They have 0:41:26.800 --> 0:41:30.600 remains sort of man children, uh, kind of failed upward. Yeah, 0:41:30.680 --> 0:41:33.280 that sort of thing. Um. And again we're dealing abroad 0:41:33.320 --> 0:41:36.000 tropes here. But you know, to some extent, I think 0:41:36.000 --> 0:41:40.600 it's useful to consider to consider these, um. But but 0:41:40.719 --> 0:41:42.920 also I feel like it does get too into the 0:41:43.000 --> 0:41:47.320 idea that that when we're dealing with the trajectory of 0:41:47.320 --> 0:41:51.439 of the human life, you know, um, part of it 0:41:51.480 --> 0:41:54.480 is perhaps comes down to just our ability to forecast 0:41:54.520 --> 0:41:56.880 the future, our ability to make long to engage in 0:41:56.920 --> 0:42:00.440 long term planning. Like we're as humans were generally not 0:42:00.520 --> 0:42:03.040 as good about that. We're certainly not good about planning 0:42:03.040 --> 0:42:05.680 beyond uh, you know, the scope of a human life. 0:42:05.719 --> 0:42:08.160 But but even like beyond the scope of a of 0:42:08.200 --> 0:42:10.920 a few years, we're better at the short term goals, 0:42:11.360 --> 0:42:14.640 and it's only with considerable effort that we we get 0:42:14.640 --> 0:42:18.439 better at considering long term goals. UM. So I think 0:42:18.440 --> 0:42:21.160 that's important to keep in mind. And all of this now, 0:42:21.239 --> 0:42:23.320 one thing that I think is also interesting in Miller's 0:42:23.320 --> 0:42:26.319 writings is that he talks, he talks a bit about 0:42:26.400 --> 0:42:30.040 over confidence, you know, as a symptom of underlying issues, 0:42:30.440 --> 0:42:34.479 you know, as opposed to being like an intrinsic quality. Uh. 0:42:34.800 --> 0:42:39.640 He writes, Unfortunately, configuration and synergy are usually attained at 0:42:39.640 --> 0:42:43.520 the cost of myopia. Stellar performers view the world through 0:42:43.600 --> 0:42:47.640 narrowing telescopes. One point of view takes over, one set 0:42:47.640 --> 0:42:51.640 of assumptions comes to dominate. The result is complacency and 0:42:51.760 --> 0:42:54.920 over confidence. And I think that plays into a lot 0:42:54.920 --> 0:42:58.080 of what what we've we spoke about earlier. You know, Sorry, 0:42:58.120 --> 0:42:59.840 I'm trying to make sense of it. Given that this 0:43:00.000 --> 0:43:02.279 out the word synergy in it, I shouldn't know what 0:43:02.320 --> 0:43:04.880 that means. By now I've purged it from my brain. 0:43:05.320 --> 0:43:07.880 Oh okay, I see now, yeah, I'm looking at the quote. Okay, 0:43:07.880 --> 0:43:11.160 so no, this is this is a very standard thing. Uh. 0:43:11.200 --> 0:43:15.160 You know, if you have successfully hammered several nails in 0:43:15.480 --> 0:43:18.280 everything and you've still got the hammer, everything really starts 0:43:18.320 --> 0:43:21.959 to look like a nail, just because like, if you've 0:43:21.960 --> 0:43:25.440 had success with the strategy in the past, you don't switch. 0:43:25.600 --> 0:43:27.920 You just keep doing what you've done before, even if 0:43:27.960 --> 0:43:29.799 it doesn't make sense anything like, yeah, this is the 0:43:29.920 --> 0:43:32.319 this is what works, this is what our product is, 0:43:32.880 --> 0:43:35.400 and this is what we're going to stick to. Um 0:43:35.560 --> 0:43:37.280 and and then yeah, he talks a good bit about 0:43:37.520 --> 0:43:40.600 to do about overconfidence as just a result of success 0:43:40.719 --> 0:43:44.600 writing quote failure teaches leaders valuable lessons, but good results 0:43:44.640 --> 0:43:48.440 only reinforce their preconceptions and tether them more firmly to 0:43:48.560 --> 0:43:53.319 their tried and true recipes. Success also makes managers overconfident, 0:43:53.400 --> 0:43:56.239 more prone to excess and neglect, and more given to 0:43:56.280 --> 0:43:59.520 shape strategies to reflect their own preferences rather than those 0:43:59.560 --> 0:44:02.600 of the cut stomers and uh, you know. He also 0:44:02.680 --> 0:44:05.920 points to one of the key aspects of the Acreus 0:44:05.920 --> 0:44:11.000 paradox being that overconfident, complacent executives extend the very factors 0:44:11.040 --> 0:44:14.920 that contributed to success to the point where they cause decline. 0:44:15.280 --> 0:44:18.040 So the thing that's working on, you know, the button 0:44:18.080 --> 0:44:21.160 we're pushing that is leading to success, let's just really 0:44:21.239 --> 0:44:24.040 jam that sucker. You're like the rat in the experiment 0:44:24.080 --> 0:44:27.960 that keeps pushing the cocaine button. Yeah. So he summarizes 0:44:28.000 --> 0:44:30.880 that there are really two aspects of the Acreus paradox. 0:44:30.960 --> 0:44:33.160 One is the success can lead to failure via the 0:44:33.160 --> 0:44:36.239 fostering of overconfidence and other factors. And then to the 0:44:36.320 --> 0:44:39.320 aspects of a business that brings success can also hasten 0:44:39.400 --> 0:44:42.960 failure or quote, the very causes of success, when extended, 0:44:43.239 --> 0:44:46.719 may become the causes of failure. And as far as 0:44:47.120 --> 0:44:50.160 you know ways to fight these transformations, because that's when 0:44:50.200 --> 0:44:52.520 one question I had, It's like, it's just just the trajectory, 0:44:52.520 --> 0:44:55.759 this is what happens. Like this is things can't just 0:44:55.800 --> 0:45:01.240 go up forever and a business cannot just exist, you know, indefinitely, 0:45:01.320 --> 0:45:05.399 Like things have to die, right, I mean, these corporations 0:45:05.400 --> 0:45:08.440 are not like you mortals, but they are given to 0:45:09.000 --> 0:45:12.560 life and death. They're not eternal. Uh and and he says, 0:45:12.760 --> 0:45:15.520 he argues that there are ways to fight these transformations. 0:45:15.920 --> 0:45:20.320 He suggests self reflection and intelligence gathering that guards against excess, 0:45:20.440 --> 0:45:24.600 over confidence and irrelevance. And this this I think matches 0:45:24.640 --> 0:45:26.239 up with what we've been talking about so far in 0:45:26.280 --> 0:45:29.640 the individual level, like like if you think you're you're gracious, 0:45:29.680 --> 0:45:32.719 like take a step back and and and uh and 0:45:32.719 --> 0:45:35.200 and think in the question whether you know you actually 0:45:35.200 --> 0:45:37.080 are to what extent you are? What else you could 0:45:37.080 --> 0:45:39.240 be doing to ensure that that that you were actually 0:45:39.280 --> 0:45:42.319 living up to your overestimation of self? If you think 0:45:42.320 --> 0:45:44.960 it's true about yourself, prove it, prove it to you. Yeah, 0:45:45.000 --> 0:45:47.840 I have to say Miller was a is a is 0:45:47.840 --> 0:45:49.719 a really good writer about it. This because normally I'm 0:45:49.719 --> 0:45:54.120 not interested in business culture type stuff like this. But 0:45:54.120 --> 0:45:55.640 but he does a great job of like tying it 0:45:55.680 --> 0:45:59.320 back into just the basic human scenario as well. Like 0:45:59.320 --> 0:46:02.720 like he points out that excellence in any human endeavor, 0:46:02.760 --> 0:46:05.160 be at arts or sports or what have you, you know, 0:46:05.160 --> 0:46:07.560 it tends to come at a price. We cannot excel 0:46:07.680 --> 0:46:10.759 at everything. We have to make sacrifices and choose what's 0:46:10.800 --> 0:46:13.520 important in the middle of the road or a jack 0:46:13.560 --> 0:46:17.280 of all trades approach is not going to lead to greatness, 0:46:17.719 --> 0:46:20.120 you know, unless it's a story or some fable where 0:46:20.160 --> 0:46:26.040 greatness is just thrust upon somebody, you know, Uh, there's 0:46:26.080 --> 0:46:28.640 got to be some sort of a trade off there. 0:46:28.960 --> 0:46:30.719 And he says it goes for the individual, but it 0:46:30.719 --> 0:46:33.720 also applies to companies as well. You can only sharpen 0:46:33.800 --> 0:46:36.399 your blade if you first realize that it is dull 0:46:36.480 --> 0:46:38.839 and must be sharpened, you know, like if if you 0:46:39.000 --> 0:46:42.359 if you believe yourself eternally and infinitely sharp, you're not 0:46:42.400 --> 0:46:44.680 going to do the sharpening right. And it's interesting to 0:46:44.719 --> 0:46:46.680 come back and think about the individual level and think 0:46:46.680 --> 0:46:49.880 about over confidence in this scenario, like one like basic 0:46:49.920 --> 0:46:52.799 trophy mentions is the idea of, say, you know, the 0:46:52.920 --> 0:46:56.160 artists who neglects their family to focus on their art, 0:46:56.280 --> 0:46:58.719 or a business person that does the same thing. In 0:46:58.760 --> 0:47:02.880 those scenarios, it be you know, I guess you know, 0:47:03.120 --> 0:47:05.440 maybe in a warped sensor in a way that that 0:47:05.440 --> 0:47:08.520 that caters to their their prime focus. Might it be 0:47:08.520 --> 0:47:11.080 beneficial to just think, oh, I'm a good dad, I'm 0:47:11.080 --> 0:47:14.400 a good husband, even when they're not. But it enables 0:47:14.400 --> 0:47:16.680 them to then put all of their more of their 0:47:16.680 --> 0:47:20.080 resources anyway into the pursuit of the thing that ultimately 0:47:20.120 --> 0:47:22.840 matters to them, like you know, card, hard cold cash, 0:47:23.000 --> 0:47:27.000 or the pursuit of art. Yeah. Well, so to be clear, 0:47:27.160 --> 0:47:30.320 obviously this wouldn't mean that it's actually useful in being 0:47:30.360 --> 0:47:32.839 a good person have any good life, but it may 0:47:33.120 --> 0:47:36.920 very well be useful in focusing on whatever it is 0:47:36.960 --> 0:47:40.160 that really matters to you, to be overconfident about your 0:47:40.239 --> 0:47:43.880 your crappy efforts in other areas of life. Yeah, I 0:47:44.160 --> 0:47:47.000 think that's entirely true. So it's it's yeah, it's interesting 0:47:47.000 --> 0:47:49.400 to compare the to the corporate version of this and 0:47:49.440 --> 0:47:51.719 the individual version of this. And certainly if you want 0:47:51.719 --> 0:47:54.840 to read more about this idea of the Chris paradox, 0:47:55.000 --> 0:47:58.400 uh I certainly recommend checking out more of his writings. 0:47:58.440 --> 0:48:01.080 So we have all these economic metaphors, like you know 0:48:01.160 --> 0:48:04.080 from Adam Smith, the Invisible Hand or whatever. I feel 0:48:04.120 --> 0:48:07.560 like we need an economic metaphor of the nemesis, like 0:48:07.600 --> 0:48:10.799 the Nemesis that is this force in the market that 0:48:10.840 --> 0:48:15.640 swoops into punish hubrist and overconfidence in business. Yeah, sometimes 0:48:15.680 --> 0:48:20.360 it seems like Nemesis is a little a little uh 0:48:20.840 --> 0:48:22.960 resistant to doing that. I don't know. I mean, part 0:48:22.960 --> 0:48:24.840 of it comes down again to the fact that that 0:48:25.360 --> 0:48:30.080 businesses and corporations are are are less mortal. Well, yeah, 0:48:30.120 --> 0:48:32.680 I mean it is funny that, uh, we've discussed a 0:48:32.719 --> 0:48:35.640 lot of these episodes how overconfidence can both lead to 0:48:35.840 --> 0:48:39.759 disaster and and negative outcomes, but can also in some 0:48:39.840 --> 0:48:44.040 cases be highly rewarded and be very lucrative. Yeah. Yeah, 0:48:44.840 --> 0:48:49.040 you know, I'm also remind talking about, you know, curbing 0:48:49.160 --> 0:48:52.520 overconfidence or the perception of overconfidence by making statements that 0:48:52.600 --> 0:48:55.520 cannot be put to the test. You of course see 0:48:55.520 --> 0:48:57.920 that a lot in the business world. You know that 0:48:58.480 --> 0:49:01.200 if you're saying you're the best card leadership in the galaxy, 0:49:01.880 --> 0:49:03.640 you know that you can get away with saying you're 0:49:03.680 --> 0:49:07.400 the best car dealership in town. Well then people can say, well, 0:49:07.440 --> 0:49:09.800 let's see your sales numbers, let's compare you to gems 0:49:09.800 --> 0:49:11.879 across town. No, even that would be easier to get 0:49:11.880 --> 0:49:13.400 away with. Like the one that would be hard to 0:49:13.400 --> 0:49:15.520 get away with is saying like we have the lowest 0:49:15.640 --> 0:49:18.400 prices in town. That's something like that. Then you're like, 0:49:18.800 --> 0:49:21.480 then you're stuck either that's true or that's not right. 0:49:22.239 --> 0:49:24.320 But then again, on a personal and the personal level, 0:49:24.360 --> 0:49:26.440 you know, you can have your mug that says world's 0:49:26.440 --> 0:49:29.480 greatest dad and nobody's gonna call you on that. What 0:49:29.600 --> 0:49:33.560 you can get out your dad ruler and measure me. Yeah, 0:49:33.680 --> 0:49:36.120 all right, So I think we've we've reached the end 0:49:36.160 --> 0:49:39.239 of our discussion here for the week on over confidence, 0:49:39.880 --> 0:49:41.799 but clearly there's a there's a lot of material here. 0:49:42.080 --> 0:49:44.799 It will be interesting to hear back from listeners because 0:49:44.800 --> 0:49:46.560 I think we all have some perspective on this. We 0:49:46.600 --> 0:49:50.279 all have experience with with over confidence in others, or 0:49:50.719 --> 0:49:54.040 certainly in over confidence in ourselves or the management of 0:49:54.080 --> 0:49:56.960 overconfidence in ourselves, and so we we'd love to hear 0:49:56.960 --> 0:49:59.640 everyone's thoughts on this. In the meantime, if you want 0:49:59.640 --> 0:50:01.640 to check other episodes of stuff to blow your mind. 0:50:02.040 --> 0:50:05.160 You can find them wherever you find your podcasts. 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