Tag Archives: Overconfidence

Difference Wisdom

Seek serenity to accept what you cannot change, courage to change what you can, and wisdom to know the difference.

Imagine that you were thinking of buying or building a house. Now consider various possible hypothesis you might have about your degree of influence over this resulting house.

At one extreme, you might fatalistically assume you had no influence. For example, you might think your spouse will pick the neighborhood, house, and all later home improvements, and that you’d have zero input. If this assumption were mistaken, you might later regret that you’d invested little effort in thinking about what you wanted, or what was feasible.

At the other extreme, you might assume you had budget and approval for a huge estate and mansion anywhere you wanted.   So you might sketch out elaborate designs – the bowling alley goes here, ballroom to the south, the helipad over there, and so on. If your budget was actually far smaller, however, most of this effort might be wasted.

Yes, it can be good to spend a bit of time considering a wide range of influence levels. Sure, sometimes you might think about what you’d do if you won the lottery, or if you were locked in jail for decades. But surely most of your planning should be done matched to the scale of your actual degree of influence. Not much point in shopping for the best private jet if you can barely afford a car.

The same principle applies to our strongest relations, such as romance and friendship. These matter greatly deal to us, and so we’d very much like to control them. We make lists of what we want in our mates and allies, we rehearse what we will and won’t accept from partners, and we analyze our interactions to assure ourselves we understand what is happening.

But much of this is illusory overconfidence and over-reach; we usually have far less control over and understanding of our relations than we think. Sure we can list features we like and dislike, all else equal. And we might be mostly correct about which way those features influence our attraction. Even so, we mostly just don’t know why we like some and dislike others. Sometimes we don’t even realize who it is we like and dislike.

If we calculate that it would be in our interest to like or dislike someone more, we have only a very limited ability to actually make ourselves do this. Even when we decide we’d be better off breaking it off a relation, we can find that quite hard to actually do so. More likely we’ll break something off and then make up reasons about why that was a good idea.

I’m not saying to never think about your relations; I’m saying such thinking is more useful when you are more realistic about your influence. Of course if others get wind of your realism they may respect you less, or think they can walk all over you. So in that way it might be in your interest to be somewhat deluded about your influence. And you won’t get to be a famous inspirational speaker on relationships by speaking honestly about them.  But be careful to not take your confident image too seriously.

The same principle also applies in futurism. It is tempting to think we can remake the universe to be anything we now collectively want, and so to spend great efforts wondering how exactly we would want the universe to be if we had our druthers. But if we are actually very constrained in our influence, most of this effort will be wasted. Oh it might be a helpful exercise in far-mode thinking, to affirm far values and assert confidence in our abilities.  But it might not do much for the future.

When our ability to influence the future is quite limited, then our first priority must be to make a best guess of what the future will actually be like, if we exert no influence. This best guess should not be a wishful assertion of our far values, it should be a near-real description of how we would actually bet, if the asset at risk in the bet wer something we really cared about strongly. And yes, that description may well be “cynical.”

With such a cynical would-bet best guess, one should then spend most of one’s efforts asking which small variations on this scenario one would most prefer, and what kinds of actions could most usefully and reliably move the future toward these preferred scenarios. (Econ marginal analysis can help here.)  And then one should start doing such things.  Yes this approach seems less noble, fun, and optimistic, and talking this way won’t make you an inspirational futurist, speaking at all the hip conferences. Even so, those small shifts are what would actually most help the future.

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Overconfident Innovation

Some sorts of overconfidence benefit the world:

This paper uses … [a] measure of overconfidence, based on CEO stock-option exercise, to study the relationship between a CEO’s “revealed beliefs” about future performance and standard measures of corporate innovation. … The model predicts that overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and that this effect is larger in more competitive industries. We test these predictions on a panel of large publicly traded firms for the years 1980 to 1994. We find a robust positive association between overconfidence and citation-weighted patent counts in both cross-sectional and fixed-effect models. This effect is larger in more competitive industries. Our results suggest that overconfident CEOs are more likely to take their firms in a new technological direction. (more)

Added 8JunePostrel on John Nye:

Professor Nye argued that the wins and the losses probably don’t cancel out. Even the biggest winners don’t make enough money personally to cover the losses of all the individuals who went into businesses that failed. … The lucky-fools theory suggests, then, that Victorian Britain’s economy was successful but stagnant not because investors were irrationally afraid of risks but because they were all too mature and calculating. They didn’t tolerate the foolish chances that a vital economy requires.

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Confidence or Silence

When prestigious academics evaluate the vita (i.e., publication list) of another academic, they want to see only top journals listed there.  A vita with five top journal articles and ten medium journal articles looks worse to them than a vita with just five top articles; if you can’t publish in the very top journals, they’d rather you didn’t publish at all.

Paul Davies is chair of the SETI Post-Detection Taskgroup.

Paul Davies, chair of the group that decides what SETI scientists will do if evidence of aliens is ever found, thinks similarly about science news: until scientists can say something to the public with great (~99%) confidence, they should say nothing.  (Quotes below.)  You see, frequent public updates on science issues of great popular interest, like evidence of aliens or asteroids headed toward Earth, would result in reporters bothering scientists at work with “mayhem”, disrupting their “lines of communication,” and disturbing their “dispassionate analysis.”  The fact that most early low-probability signs would end up being false alarms is “damaging to the credibility of science.”  So until scientists can confidently say that an asteroid will hit us or that we see aliens, they should just whisper to each other.

In the extreme case of receiving an actual alien message directed at us, Davies prefers scientists to kept quiet for the many years it would likely take to decode it fully.  And he prefers aliens to not send us any useful tech info, as then we would fight over who could decode it first.  How disruptive!

One might justify this confidence-or-silence policy by arguing either that non-scientists are biased to overreact to low confidence news, or that reporters are biased to present low probability news as if it were high probability, and non-scientists gullibly believe them.  I have not seen any systematic evidence presented in support of these claims, however.

Within academia, the bias against non-top articles seems like signaling.  Since folks confident they are great would not admit they’d ever done work that could not meet the highest standards, medium journal publications reveal a lack of confidence.  Similarly, I suspect signaling is behind the confidence-or-silence policy.  Since it is harder to credibly say something with great confidence than with low confidence, saying something with low confidence sends a bad signal about your abilities.  Keeping info secret is also a status move; info gives control and control marks status.

Quotes from Eerie Silence: Continue reading "Confidence or Silence" »

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Overconfidence Looks Good

Overconfidence is a Social Signaling Bias:

We test three different theories about observed relative overconfidence. The first theory notes that simple statistical comparisons are compatible with a Bayesian model of updating from a common prior and truthful statements. … Data on 1,016 individuals’ relative ability judgments about two cognitive tests rejects the Bayesian model. The second theory suggests that self-image concerns asymmetrically affect the choice to get new information about one’s abilities. … We test an important specific prediction of these models: individuals with a higher belief will be less likely to search for further information about their skill. … Our data also reject this prediction. The third theory is that overconfidence is induced by the desire to send positive signals to others about one’s own skill; this suggests either a bias in judgment, strategic lying, or both. We provide evidence that personality traits strongly affect relative ability judgments in a pattern that is consistent with this third theory. Our results together suggest that overconfidence in statements is most likely to be induced by social concerns than by either of the other two factors.

This of course means that you should expect to risk looking less impressive to others if you correct for your overconfidence.

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How To Survey Confidence

In a 3-point elicitation procedure, an expert is asked for a lower limit, upper limit, and best guess, the two limits creating an interval of some assigned confidence level (e.g., 80%). In our 4-step interval elicitation procedure, experts were also asked for a realistic lower limit, upper limit, and best guess, but no confidence level was assigned; the fourth step was to rate their anticipated confidence in the interval produced. … We … found average overconfidence of 11.9%, 95% CI [3.5, 20.3] (a hit rate of 68.1% for 80% intervals)—a substantial decrease in overconfidence compared with previous studies.

More here.

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Forensic Delusions

A groundbreaking report by the National Academy of Sciences (NAS) last year recognized that much of forensic science is not rooted in solid science. Many forensic disciplines — such as hair microscopy, bite-mark comparisons, fingerprint analysis, firearm testing and tool-mark analysis — were developed solely to solve crimes.  They evolved mainly in the context of individual cases, which often had significant variation in resources and expertise. They have not been subjected to rigorous experimental scrutiny, and there are no standards or oversight in the United States or elsewhere to ensure that validated, reliable forensic methods are used consistently. With the exception of DNA analysis, no forensic method has been proved to reliably and accurately demonstrate a connection between evidence and a specific source. …

We advocate the creation of an office of forensic science improvement and support (OFSIS) within the US Department of Commerce to spur independent research, develop standards and ensure compliance. … [Some] within the forensic-science and law-enforcement fields … argue that an OFSIS is not necessary and that laboratory accreditation is sufficient. … They argue that an OFSIS would cost too much … and that it could create chaos in the US justice system by reopening countless old cases. … Political and criminal-justice ends — rather than research imperatives — have taken forensic science off course. … See www.just-science.org.

More here.  The primary social pressure on law court practices is for courts to give the appearance of punishing guilty folks.  Observers have much less info on who is actually guilty.  So the main pressure on legal standards is that officially-accepted evidence seem to the public, juries, and judges to indicate guilt, not that it actually indicate guilt.  We expect the law to be overconfident about its evidence.

Requiring that legal evidence standards stand up to independent experimental scrutiny would create a more accurate legal system, but at the expense of reducing the apparent rate at which the guilty are punished.  So I expect, sadly, this proposal to be rejected.

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The Confidence Heuristic

In Moore’s experiment, volunteers were given cash for correctly guessing the weight of people from their photographs. In each of the eight rounds of the study, the guessers bought advice from one of four other volunteers. The guessers could see in advance how confident each of these advisers was (see table), but not which weights they had opted for.

From the start, the more confident advisers found more buyers for their advice, and this caused the advisers to give answers that were more and more precise as the game progressed. This escalation in precision disappeared when guessers simply had to choose whether or not to buy the advice of a single adviser. In the later rounds, guessers tended to avoid advisers who had been wrong previously, but this effect was more than outweighed by the bias towards confidence. …

Moore said that following the advice of the most confident person often makes sense, as there is evidence that precision and expertise do tend to go hand in hand. For example, people give a narrower range of answers when asked about subjects with which they are more familiar.

There are times, however, when this link breaks down. With complex but politicised subjects such as global warming, for example, scientific experts who stress uncertainties lose out to activists or lobbyists with a more emphatic message.

That is from New Scientist back in June.  So the key hard question is: when does confidence credibly signal expertise, and when it is just empty cheap talk?  Hat tip to Toby Ord.

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Shy And Badly Dressed

Gladwell:

The psychologist Ellen Langer once had subjects engage in a betting game against either a self-assured, well-dressed opponent or a shy and badly dressed opponent (in Langer’s delightful phrasing, the “dapper” or the “schnook” condition), and she found that her subjects bet far more aggressively when they played against the schnook. They looked at their awkward opponent and thought, I’m better than he is. Yet the game was pure chance: all the players did was draw cards at random from a deck, and see who had the high hand. This is called the “illusion of control”: confidence spills over from areas where it may be warranted (“I’m savvier than that schnook”) to areas where it isn’t warranted at all (“and that means I’m going to draw higher cards”).

I was once a shy badly dressed person who didn’t understand why people kept underestimating him.  Now I know.

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Obama’s Opportunity Cost

The US public has long felt guilty about historical racism, and so they felt great about electing a black president, and giving him some space to do what he wants. That and Bush-hatred seemed to give progressives a rare opportunity to achieve many things they’ve always wanted.

This opportunity now seems substantially squandered.  Obama has spent much of his political capital on changes far from professed progressive priorities.  He spent lots on fiscal stimulus and nationalizing the auto industry, and seems to have too little left for big medical and financial reform.  Tyler and I have long said Obama can’t do near as much as supporters seemed to think, and we’ve been puzzled to hear this prospect dismissed out of hand .

For Obama and his new-to-power advisers, this failure may come from overconfidence, but his old-hand-operative advisers should have known better.  So either their stern warnings were ignored, or they betrayed him by not making stern warnings.  Since much of Obama’s political capital was spent by longtime congressional Democrats choosing the detailed pork of stimulus and related bills, they might be blamed.  If they said “Support us to pick this pork now, and we’ll help you get health care reform later,” they were basically taking him to the cleaners.

For progressives, the lost opportunity here is not just bills not passed, or the public checking off “elect a minority president” from their to-do-list.  Another cost is a more conservative public opinion. Psychology experiments explain: Continue reading "Obama’s Opportunity Cost" »

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Write Your Hypothetical Apostasy

Let's say you have been promoting some view (on some complex or fraught topic – e.g. politics, religion; or any "cause" or "-ism") for some time.  When somebody criticizes this view, you spring to its defense.  You find that you can easily refute most objections, and this increases your confidence.  The view might originally have represented your best understanding of the topic.  Subsequently you have gained more evidence, experience, and insight; yet the original view is never seriously reconsidered.  You tell yourself that you remain objective and open-minded, but in fact your brain has stopped looking and listening for alternatives.

Here is a debiasing technique one might try: writing a hypothetical apostasy.  Remind yourself before you start that unless you later choose to do so, you will never have to show this text to anyone.

Imagine, if you will, that the world's destruction is at stake and the only way to save it is for you to write a one-pager that convinces a jury that your old cherished view is mistaken or at least seriously incomplete.  The more inadequate the jury thinks your old cherished view is, the greater the chances that the world is saved.  The catch is that the jury consists of earlier stages of yourself (such as yourself such as you were one year ago).  Moreover, the jury believes that you have been bribed to write your apostasy; so any assurances of the form "trust me, I am older and know better" will be ineffective.  Your only hope of saving the world is by writing an apostasy that will make the jury recognize how flawed/partial/shallow/juvenile/crude/irresponsible/incomplete and generally inadequate your old cherished view is.

(If anybody tries this, feel free to comment below on whether you found the exersise fruitful or not – but no need to state which specific view you were considering or how it changed.)

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