Sep. 20, 2011 at 2:39 PM ET
Human beings – and no, not just Americans – are an overconfident bunch. That’s why most men will say they are more attractive than average, most doctors say they are better doctors than average, and a hilarious 70 percent of high school students say they are better leaders than average high school students, none of which is possible, of course.
You’d think this bias in favor of ourselves would always be a bad idea, but read the Declaration of Independence. Those guys took on the most powerful nation the world had ever seen. Sometimes being a little cocky pays off.
That potential for payoff is why Dominic Johnson, of the University of Edinburgh, and James Fowler of the University of California San Diego, write in the journal Nature that human society evolved to contain overconfident people. “There can be material rewards for holding incorrect beliefs about one’s own capability,” they argue in presenting a model of overconfidence.
As a commentary that accompanied the article explained, if two parties want something, they can fight for it, which comes at a cost. If only one claims the prize, he gets it without a fight. If both parties are gifted with perfect judgment about each other’s strength, then there’ll never be a fight because the weaker party will know to back off.
But contrary to what advocates of “rational markets” argue, there is almost always uncertainty. In that knowledge gap, you can talk yourself into thinking that your reach does not actually exceed your grasp. So deluded, you may try for what you want and sometimes the real stronger party won’t compete. If you are, say, skinny, goofy, lisping Roger Rabbit, you can make a play for Jessica (va-va-voom!) and wind up with the sexiest babe in Toon Town. Hooray for you.
But there is a dark side. That’s where Las Vegas casinos make their money. And recall all those blustering house flippers and bragging Wall Street quants ordering Petrus back in 2005?
Whether or not overconfidence is positive or negative depends on costs. Back in evolutionary time, costs were usually contained to yourself if Gork the caveman beat you up over a chunk of meat. In the modern world the costs can be slight -- if Jessica turns you down for a date you might be a little embarrassed, but so what? You stand to gain Jessica Rabbit!
They can also be earth shaking. So if your smug shock-and-awe jingoism could cost a national fortune and kill tens of thousands of people, and your mondo clever financial wizardry could wreck the world economy, please think about checking that cocksure attitude, O.K.?