What Is Overconfidence Bias?

Last updated
October 25, 2026
Overconfidence bias makes you surer of a forecast or judgement than your track record on calls like it can support. It shows up as a target nobody tests, because the person setting it already feels they know the answer.
  • Don Moore and Paul Healy's 2008 review in Psychological Review separated three kinds of overconfidence: overestimating how well you'll do, placing yourself above others, and being too sure your estimate is precise. A single-figure target hides the third kind, because it gives no range for anyone to question.
  • One good year is the thinnest track record there is. If the case for a forecast is "we did it last year", nobody has yet asked what made last year happen.
  • The tell is a forecast with no range. Ask for a low, likely and high figure. If the person can give you only one, they're more certain than their information allows.
  • Confidence that has been tested isn't the problem. A forecast built account by account and checked against several years can be bold and still be earned.

What Causes Overconfidence Bias?

A good result feels like information about you. It confirms the plan, the team and the judgement behind them, so the next forecast starts from a higher sense of what you're capable of. What rarely gets asked is how much of the result you caused.

Overconfidence grows in that gap. When a result has outside causes, such as a rival stumbling or a market lifting everyone, the confidence it produces has nothing underneath it. The forecast that follows rests on a cause that may not come back.

For a leader, it shows up as certainty that travels downwards. A target set with conviction at the top reaches the people closest to customers as a number to deliver, and their quieter view of what each account can do goes unheard.

The check is to set the forecast against your base rate: how often have you grown like this, over how many years, and what was different each time? One year is a single case, and a single case can't tell you what's normal.

The practical tell is a forecast defended with "we did it last year". That line is your cue to look harder at last year before you count on it again.

What's a Real Example of Overconfidence Bias in a Sales Forecast?

The year after a rival's distribution collapse handed us a 25% jump in sales, Andrew, our Managing Director, wanted another 20%. I'd been working through my accounts to see where growth could really come from, and I could find only a few customers with room to spend more. Andrew's case was simpler: we'd done it the year before, and nobody in the room asked how much of that year had been ours to repeat. We finished the year 6% up, and most of that came from customers we hadn't had twelve months earlier.

Even leaders who know the term guard against it by trimming the same number. A forecast cut by 10% is still built on the year you didn't control.
sources
  1. Moore, D. A., & Healy, P. J. (2008). The trouble with overconfidence. Psychological Review, 115(2), 502–517. doi.org

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