© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Overconfidence in one’s own abilities is a familiar trait. Almost everyone has encountered an individual with an impregnable – though often somewhat misplaced – belief in the superiority of their own physical or intellectual abilities.
Now in a series of experiments a group of researchers have found that such overconfidence is due to the lure of social status.
“People who believed they were better than others, even when they weren’t, were given a higher place in the social ladder,” says Cameron Anderson, an associate professor at the University of California Berkeley, Haas School of Business.
“And the motive to attain higher social status thus spurred overconfidence.” Prof Anderson speculates that this may well be a reason why incompetent people are often promoted over their more competent colleagues in organisations. In organisations he says, individuals are very easily swayed by others’ confidence, even when that confidence is unjustified. Displays of confidence are given an inordinate amount of weight.
With co-authors Sebastien Brion, an assistant professor of managing people in organisations at Iese Business School, Spain, Don Moore, an associate professor of management,at Haas and Jessica Kennedy, a post-doctoral fellow at the Wharton School at the University of Pennsylvania, Prof Anderson examined overconfidence. Misplaced self belief can have detrimental consequences for the individual and negatively impact on both performance and decision making, point out the authors. However, despite these negative points the authors discovered that the lure of social status was enough to encourage an individual to be overconfident because a belief in one’s own superiority brings with it profound social benefits.
The authors ran a series of experiments to discover why people become overconfident and how overconfidence equates with a rise in social stature. In one experiment captured on video, overconfident individuals were seen to speak more often, in a confident tone, acted calmly and provided more information and answers. In fact the researchers found that overconfident people “simply participated more and exhibited more comfort with the task – even though they were no more competent than anyone else,” says Prof Anderson.
The authors suggest that organisations should look for objective indices of merit and should take an individual’s confidence in his or her own abilities with a pinch of salt.
The study “A status-enhancement account of overconfidence” will be published in a forthcoming edition of the Journal of Personality and Social Psychology.
● For long-term happiness it might well be better to opt for ambitious and difficult-to-attain goals, rather than modest achievements.
Gita Johar, senior vice-dean and professor of business at Columbia Business School and Cecile Cho, now assistant professor at the University of California Riverside have compared the levels of satisfaction between those who set themselves low goals with those who opt for more ambitious ones.
Using the context of financial decision making, participants were asked to set a figure on a return on investment that they would find satisfactory. Some participants had been primed to set low goals while others had been left to establish their own goals. All the participants then took part in an investment simulation and were subsequently told that their investments had met their performance goals.
The two researchers discovered that those individuals who had set themselves low investment goals were less satisfied than those who had aimed for a more ambitious target. The authors believe that these individuals compared their performance with what it could have been and were therefore “doomed to disappointment when they set low goals”.
Attaining satisfaction is published in the Journal of Consumer Research.
Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.