[74 min 15 sec] – From the Alumni Conference 2011 featuring Don Moore, Associate Professor, Management of Organizations Group
Overconfidence is one of the most common biases to which human judgment falls victim. While confidence can, under some circumstances, have benefits, overconfidence can get us, and the organizations we work for, into big trouble. Overconfidence has been implicated in the willingness to initiate lawsuits, strikes, price wars, and armed conflicts. It may also be able to explain the frequency of mergers and acquisitions (despite their problems), high rates of entrepreneurial entry (despite their high rates of failure), and the high rate of trading in the stock market (despite the costs of trading). This session explains the human tendency toward overconfidence and how you can avoid making these mistakes.