Good decision making required more than knowledge of facts, concepts, and relationships. It also requires metaknowledge — an understanding of the limits of our knowledge. Unfortunately, we tend to have a deeply rooted overconfidence in our beliefs and judgments. Because metaknowledge is not recognized or rewarded in practice, nor instilled during formal education, overconfidence has remained a hidden flaw in managerial decision making. This paper examines the costs, causes, and remedies for overconfidence. It also acknowledges that, although overconfidence distorts decision making, it can serve a purpose during decision implementation.
Managing Overconfidence
Acknowledgments
The authors acknowledge Janet Sniezek and Ilan Yaniv for their constructive comments and Jack B. Williams for his editorial advice.