People are overly confident in their own knowledge, despite errors

Overprecision -- excessive confidence in the accuracy of our beliefs -- can have profound consequences, inflating investors' valuation of their investments, leading physicians to gravitate too quickly to a diagnosis, even making people intolerant of dissenting views. Now, new research confirms that overprecision is a common and robust form of overconfidence driven, at least in part, by excessive certainty in the accuracy of our judgments.

The research, conducted by researchers Albert Mannes of The Wharton School of the University of Pennsylvania and Don Moore of the Haas School of Business at the University of California, Berkeley, revealed that the more confident participants were about their estimates of an uncertain quantity, the less they adjusted their estimates in response to feedback about their accuracy and to the costs of being wrong.

"The findings suggest that people are too confident in what they know and underestimate what they don't know," says Mannes.