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Are You Dangerously Overconfident?
Overconfidence can turn 2020 habits into 2021 traps.
Whether you are yet familiar with the Dunning-Kruger Effect or not, it is a theory which has a profound impact on our lives and you can avoid the worst of its dangers by being aware. Overconfidence can cost a young entrepreneur money, talent and time — and with the added risks and opportunities of 2021’s unique economic environment, it’s more important than ever for aspiring moguls to step back, self-reflect and think about some weak points where Dunning-Kruger can easily creep in.
Understanding the effect in question
In 1999, psychologists David Dunning and Justin Kruger published a groundbreaking paper, “Unskilled and Unaware of It,” in which they demonstrated that people assume they are more knowledgeable or talented than they actually are, in a number of domains. In other words, we all overestimate our skills or expertise in some way. But Dunning and Kruger went further to point out that the more unskilled you are, the more likely you are to overestimate your abilities.
There has been a lot of discussion relating to the Dunning-Kruger effect related to politics and COVID-19 science in 2020 and 2021. But the concept is also an important one for those in finance and is especially relevant for…
