Overconfidence Effect

The overconfidence effect is that bias in people such that they are right far less often than they think they are. Human judgement is flawed and in many cases your first judgement is correct, it often turns out that it isn't and unless you back up your intuition with data you run the risk of going off in the wrong direction.

Malcolm Gladwell in his book Blink deals with this issue.

Many people who have an idea for a business or product overestimate the odds that it will be successful. It's related to the proximity effect which I've blogged about previously. Entrepreneurs have to guard against suffering from the its effects by consulting others who are disinterested in the outcome of your efforts.

If you're interested in this, read the Wikipedia article and follow the links. For fun make up a list of ten statements that you think are true about the world, such as "X% of Americans smoke," then do some research and find out if the facts are consistent with your view. Chances are you're not but then I could be wrong.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.