Overconfidence Bias

What It Is: Overconfidence bias is our tendency to believe we know more than we actually do. It makes us feel more certain about our opinions and decisions, even when we might be on shaky ground.

Example: Picture an investor who’s convinced a particular stock will soar. They’ve seen the data, they’ve done the analysis, and they’re so certain they ignore the warning signs of a shifting market. Their confidence could lead to risky decisions and potentially big losses. With a “strong opinions, weakly held” perspective, they would still feel confident but open to adjusting their plans if new market information appeared, helping them avoid costly mistakes.