Benefits of overconfidence
When it comes to intellectual humility, the news is not all bad. As we suggested previously, overconfidence can be beneficial. Entrepreneurs famously tend to be more confident and tolerant of risk than others.
Cooper, Woo, and Dunkelberg (1988) found that entrepreneurs exhibited unrealistic confidence about their businesses’ chances of success given observed odds of business success. Entrepreneurs are also poor at recognizing the limits of their knowledge, overestimate the extent to which their actions can increase performance, and sample a limited amount of information to draw conclusions (M. Simon, Houghton, and Aquino, 2000). In a context of high levels of competition and low chances of success, however, these positive illusions can increase motivation, raise aspiration levels, and strengthen coping mechanisms in response to adversity (Taylor and Brown, 1988).These benefits can also create halo effects, encouraging the formation of lasting connections and increasing resiliency (Fredrickson, 2001;Tugade and Fredrickson, 2004).Knowledge overconfidence can also lead people to undertake efforts they normally would not if they knew the true scale of their ignorance, such as embarking on a risky voyage, starting a new business, or trying to remodel the kitchen without professional help (S. A. Sloman and Fernbach, 2017).As long as failures (or low-quality successes) in these undertakings do not cause incapacitation or death, they may lead people to learn new skills or information that can be passed on. If attempts are successful against the odds, they may give rise to solutions or outcomes that are better than the pre-attempt status quo.Although success comes at a cost, the world may need overconfidence in order to grow and improve.
Not only are there benefits to individual overconfidence, which is the symptom, there are benefits associated with the root cause of knowledge miscalibration: the way in which humans mentally represent and store knowledge. As we have mentioned, ignorance is not only pervasive; it is a natural human state because the world is nearly infinitely complex.To deal with that complexity, humans draw seamlessly on knowledge contained not just in our own brains, but in our bodies, the environment, and especially in other people (S.A.
Sloman and Fernbach, 2017). Humans are inherently social animals who benefit from the collaboration of many individuals guided by a division of cognitive labor (S. A. Sloman and Rabb, 2016). In many ways, this is a good thing. Although knowledge miscalibration can be viewed as an error, it may simply be one byproduct of an adaptive way humans try to understand the world around them.The feeling of understanding or knowing that is associated with overconfidence may be an indirect signal to individuals that they can stop explaining or seeking more explanations for an event, because the causes are now understood (Trout, 2003).Alternatively, it may also give humans a level of insight sufficient enough to seek out appropriate experts for more information (Keil et al., 2004).This is beneficial because dealing with complexity and evaluating the validity of new information requires cognitive effort, which is aversive (Payne, 1976; Shah and Oppenheimer, 2008; H. A. Simon, 1990). Because humans try to conserve cognitive effort, there are diminishing returns to seeking additional information and explanations.Without simplified mental models, people would spend all of their time trying to find better and better explanations, causes, and courses of action, which would interfere with making decisions and ultimately taking necessary action.35.5