Don Moore

University of California, Berkeley | UCB · Haas School of Business

We propose and test the overconfidence transmission hypothesis, which predicts that individuals calibrate their self-assessments in response to the confidence others display in their social group. Six studies that deploy a mix of correlational and experimental methods support this hypothesis. Evidence indicates that individuals randomly assigned to...

Even though computational algorithms often outperform human judgment, received wisdom suggests that people may be skeptical of relying on them (Dawes, 1979). Counter to this notion, results from six experiments show that lay people adhere more to advice when they think it comes from an algorithm than from a person. People showed this effect, what w...

What are the reputational consequences of being overconfident? We propose that the channel of confidence expression is one key moderator—that is, whether confidence is expressed verbally or nonverbally. In a series of experiments, participants assessed target individuals (potential collaborators or advisors) who were either overconfident or cautiou...

Are overconfident beliefs driven by the motivation to view oneself positively? We test the relationship between motivation and overconfidence using two distinct, but often conflated measures: better-than-average (BTA) beliefs and overplacement. Our results suggest that motivation can indeed affect these faces of overconfidence, but only under limit...

Are overconfident beliefs driven by the motivation to view oneself positively? We test the relationship between motivation and overconfidence using two distinct, but often conflated measures: better-than-average (BTA) beliefs and overplacement. Our results suggest that motivation can indeed affect these faces of overconfidence, but only under limit...

What are the reputational consequences of being overconfident? We propose that the channel of confidence expression is one key moderator—that is, whether confidence is expressed verbally or nonverbally. In a series of experiments, participants assessed target individuals (potential collaborators or advisors) who were either overconfident or cautiou...

This research examines the development of confidence and accuracy over time in the context of forecasting. Although overconfidence has been studied in many contexts, little research examines its progression over long periods of time or in consequential policy domains. This study employs a unique data set from a geopolitical forecasting tournament s...

Overprecision in judgment is both the most durable and the least understood form of overconfidence. This chapter reviews the evidence on overprecision, highlighting its consequences in everyday life and for our understanding the psychology of uncertainty. There are some interesting explanations for overprecision, but none fully accounts for the div...

Overprecision is the most robust and least understood form of overconfidence. In an attempt to elucidate the underlying causes of overprecision in judgment, the present paper offers a new approach - examining people's beliefs about the likelihood of chance events drawn from known probability distributions. This approach allows us to test the assump...

Leaders must choose how to justify their organization's actions to stakeholders. We differentiate moral frames, or justifications based on moral values, from pragmatic frames, or justifications based on practical costs and benefits. In Experiments 1a and 1b, we found that moral policy frames elicited more support than pragmatic frames across a vari...

A series of experiments investigated why people value optimism and whether they are right to do so. In Experiments 1A and 1B, participants prescribed more optimism for someone implementing decisions than for someone deliberating, indicating that people prescribe optimism selectively, when it can affect performance. Furthermore, participants believe...

Entrepreneurs are often described as overconfident (or at least very confident), even when entering difficult markets. However, recent laboratory findings suggest that difficult tasks tend to produce underconfidence. How do entrepreneurs maintain confidence in difficult tasks? Our two laboratory experiments and one archival study reconcile the lite...

Every business decision depends on making a forecast of the consequences of the decision. Although most organizations do forecasting, most do so badly. They ask either for a point prediction—a single " best guess " forecast, when everyone knows that this is an oversimplification of the truth, or for a simple range forecast, which is likely to resul...

Five university-based research groups competed to recruit forecasters, elicit their predictions, and aggregate those predictions to assign the most accurate probabilities to events in a 2-year geopolitical forecasting tournament. Our group tested and found support for three psychological drivers of accuracy: training, teaming, and tracking. Probabi...

Successful leadership depends on the confidence to rally support, win allies, and deter competitors. However, overconfident leaders have led their companies into disaster. This article identifies the circumstances in which leaders are most prone to overconfidence and its concomitant risks. On the flip side, it explores those circumstances under whi...

The status-enhancement theory of overconfidence proposes that overconfidence pervades self-judgment because it helps people attain higher social status. Prior work has found that highly confident individuals attained higher status regardless of whether their confidence was justified by actual ability (Anderson, Brion, Moore, & Kennedy, 2012). Howev...

Three studies investigate the psychology of comparative judgment, examining the circumstances under which judgments tend to concentrate disproportionately on one of the two elements that underlie the comparison (i.e., focused comparisons). We examine these tendencies at the judgment formation and information retrieval stages by examining judgment c...

Statistics is all about uncertainty. Why, then, are so few of us uncertain enough? Being far too certain is a near‐universal trait: the consequences have sometimes been catastrophic. Albert Mannes and Don Moore outline the ways humans are overconfident in their judgements – and why so many of us think that we can finish decking the patio on time.

When explaining others' behaviors, achievements, and failures, it is common for people to attribute too much influence to disposition and too little influence to structural and situational factors. We examine whether this tendency leads even experienced professionals to make systematic mistakes in their selection decisions, favoring alumni from aca...

Overprecision-an excessive confidence that one knows the truth-is both the most durable and the least understood form of overconfidence. This article outlines an approach to the study of overprecision that avoids some of the methodological problems of other approaches and better reflects the way uncertainty affects choices in everyday life. We meas...

Is it possible to increase one's influence simply by behaving more confidently? Prior research presents two competing hypotheses: (1) the confidence heuristic holds that more confidence increases credibility, and (2) the calibration hypothesis asserts that overconfidence will backfire when others find out. Study 1 reveals that, consistent with the...

Individuals, groups, and societies all experience conflict, and attempt to resolve it in numerous ways. The Oxford Handbook of Economic Conflict Resolution brings together scholars from multiple disciplines to offer perspectives on the current state and future challenges in negotiation and conflict resolution. It aims to act as an aid in identifyin...

In explaining the prevalence of the overconfident belief that one is better than others, prior work has focused on the motive to maintain high self-esteem, abetted by biases in attention, memory, and cognition. An additional possibility is that overconfidence enhances the person's social status. We tested this status-enhancing account of overconfid...

Purpose – The purpose of this chapter is to explore the question of whether there is an optimal level of time pressure in groups. Design/approach – We argue that distinguishing performance from productivity is a necessary step toward the eventual goal of being able to determine optimal deadlines and ideal durations of meetings. We review evidence o...

Prior research has claimed that people exaggerate probabilities of success by overestimating personal control in situations that are heavily or completely chance-determined. We examine whether such overestimation of control persists in situations where people do have control. Our results suggest a simple model that accounts for prior findings on il...

In this paper, we investigate how market competition contributes to the expression of overconfidence among those competing for influence. We find evidence that market competition exacerbates the tendency to express excessive confidence. This evidence comes from experiments in which advisors attempt to sell their advice. In the first, advisors must...

Overprecision is the most robust type of overconfidence. We present a new method that significantly reduces this bias and offers insight into its underlying cause. In three experiments, overprecision was significantly reduced by forcing participants to consider all possible outcomes of an event. Each participant was presented with the entire range...

Disclosure is often proposed as a remedy for conflicts of interest, but it can backfire, hurting those whom it is intended to protect. Building on our prior research, we introduce a conceptual model of disclosure’s effects on advisors and advice recipients that helps to explain when and why it backfires. Studies 1 and 2 examine psychological mechan...

Performance (such as a course grade) is a joint function of an individual's ability (such as intelligence) and the situation (such as the instructor's grading leniency). Prior research has documented a human bias toward dispositional inference, which ascribes performance to individual ability, even when it is better explained through situational in...

Individuals are often ambiguity-averse when choosing among purely chance-based prospects (Ellsberg, 1961). However, they often prefer apparently ambiguous ABILITY-based prospects to unambiguous chance-based prospects. According to the competence hypothesis (Heath & Tversky, 1991), this pattern derives from favorable perceptions of one's competence....

This paper explores the psychology of conflict of interest by investigating how conflicting interests affect both public statements and private judgments. The results suggest that judgments are easily influenced by affiliation with interested partisans, and that this influence extends to judgments made with clear incentives for objectivity. The con...

People routinely assume correspondence between acts and dispositions, a systematic error prior research has labeled the "correspondence bias." Four laboratory studies investigate the robustness and generality of this tendency, and suggest that it may be even more fundamental than prior theories have supposed. Most of the research documenting the co...

We present two experiments in which advisors attempt to sell their advice, one in which advisors compete for influence in a market setting and one in which advisors and decision makers are paired throughout. Overprecision exists in both studies and helps advisors sell their advice. However, the market exacerbates overprecision.

We conduct a proper test of the claim that people are overconfident, in the sense that they believe that they are better than others. The results of the experiment we present do not allow us to reject the hypotheses that the data has been generated by perfectly rational, unbiased, and appropriately confident agents. Conducimos un test apropiado de...

In this paper we conduct two proper tests of overconfidence. We reject the hypothesis "the data cannot be generated by a rational model" in both experiments.

While many believe that money does buy happiness, research shows that richer people aren't necessarily happier people, especially in the United States.

In three studies using both laboratory and field data, we show that the focal competitor's strengths and weaknesses feature more prominently in predictions of the outcomes of future competitions than do the strengths and weaknesses of the opponents. People are more confident when their own side is strong, regardless of how strong the competition is...

Many practitioner-oriented negotiation texts advise negotiators who are under time pressure to keep their final deadlines secret, especially if they are in a weak position. While this advice is consistent with intuition, recent research on the effects of revealing deadlines in negotiation has proven it to be incorrect. This is a useful lesson for s...

The authors present a reconciliation of 3 distinct ways in which the research literature has defined overconfidence: (a) overestimation of one's actual performance, (b) overplacement of one's performance relative to others, and (c) excessive precision in one's beliefs. Experimental evidence shows that reversals of the first 2 (apparent underconfide...

Conventional wisdom holds that negotiators who are under time pressure should avoid revealing their final deadlines to the other side, especially if they are in a weak position. The present study questions this conventional wisdom. The experiment manipulates time pressure on the negotiators, knowledge of that time pressure, and each side’s power at...

Which matters more—beliefs about absolute ability or ability relative to others? This study set out to compare the effects of such beliefs on satisfaction with performance, self-evaluations, and bets on future performance. In Experiment 1, undergraduate participants were told they had answered 20% correct, 80% correct, or were not given their score...

It is common for people to be more critical of others' ethical choices than of their own. This chapter explores those remarkable circumstances in which people see no evil in others' unethical behavior. Specifically, we explore 1) the motivated tendency to overlook the unethical behavior of others when we recognize the unethical behavior would harm...

We argue that the field of organizational behavior (OB) is well positioned to adopt some of the strengths of behavioral decision research (BDR). Doing so would enable the field to gain in influence, scholarly stature, paradigm strength, and practical relevance. In the course of making this argument, we review recent advances in BDR and highlight it...

This paper considers the choice between an all-or-nothing (AON) rule and a proportionate-damages (PD) rule in civil litigation. Under AON, a prevailing plaintiff receives a judgment equal to his entire damages. Under PD, damages are reduced to reflect uncertainty. For example, if the trier of fact finds that there is a 75 percent chance that the de...

IntroductionSocial Relationships in NegotiationEgocentrism in NegotiationAttributions and Construal in NegotiationMotivated Illusions and NegotiationOut-of-control Behavior and Emotion in NegotiationConclusions

It is commonly held that people believe themselves to be better than others, especially for outcomes under their control. However, such overconfidence is not universal. This paper presents evidence showing that people believe that they are below average on skill-based tasks that are difficult. A simple Bayesian explanation can account for these eff...

People believe that they are better than others on easy tasks and worse than others on difficult tasks. In previous attempts to explain these better-than-average and worse-than-average effects, researchers have invoked bias and motivation as causes. In this article, the authors develop a more parsimonious account, the differential information expla...

This paper documents egocentric biases in market entry decisions. We demonstrate self-focused explanations for entry decisions made by three groups of participants: actual entrepreneurs (founders), working professionals who considered starting their own firms but did not (non-founders), and participants in a market entry experiment. Potential entra...

This paper presents a reconciliation of the three distinct ways in which the economic literature has defined overconfidence: (1) overestimation of one's actual performance, (2) overestimation of one's performance relative to others, and (3) overestimation of the quality of one's private signals. Experimental evidence shows that these three types of...

Recent research calls into question the generally accepted conclusion that people believe themselves to be better than average. This paper reviews the new theories that have been proposed to explain the fact that better-than-average effects are isolated to common behaviors and abilities, and that people believe themselves to be below average with r...

It is commonly held that, especially for outcomes under their control, people believe themselves to be better than others. However, such overconfidence is not universal. This paper presents evidence showing that people believe that they are below average on skill-based tasks that are difficult. A simple Bayesian explanation can account for these ef...

People report themselves to be above average on simple tasks and below average on difficult tasks. This paper proposes an explanation for this effect that is simpler than prior explanations. The new explanation is that people conflate relative with absolute evaluation, especially on subjective measures. The paper then presents a series of four stud...

Although prior studies have found that people generally underweight advice from others, such discounting of advice is not universal. Two studies examined the impact of task difficulty on the use of advice. In both studies, the strategy participants used to weigh advice varied with task difficulty even when it should not have. In particular, the res...

Conventional wisdom holds that negotiators who are under time pressure should avoid revealing their final deadlines to the other side, especially if they are in a weak position. The present study questions this conventional wisdom. The experiment manipulates timepressure on the negotiators, knowledge of that time pressure, and each side's power at...

Research on procedural justice has found that processes that allow people voice (i.e., input) are perceived as fairer, and thus elicit more positive reactions, than processes that do not allow people voice. Original theorizing attributed these effects to beliefs that the provision of voice enhances people’s sense of process control, which people we...

This paper presents a reconciliation of the three distinct ways in which the research literature has defined overconfidence: (1) overestimation of one's actual performance, (2) overplacement of one's performance relative to others, and (3) excessive precision in one's beliefs. Experimental evidence shows that reversals of the first two (apparent un...

Economic models typically allow for “free disposal†or “reversibility†of information, which implies non-negative value. Building on previous research on the “curse of knowledge†we explore situations where this might not be so. In three experiments, we document situations in which participants place positive value on information in attemp...

Nelson argues that we should trust the auditing profession and collect more data before taking action to reform the auditing system. We argue that the risk of doing nothing is greater than the risk associated with reform, and that the arguments Nelson makes have been exploited by the auditing industry to defend a system that destroys the independen...

A series of financial scandals revealed a key weakness in the American business model: the failure of the U.S. auditing system to deliver true independence. We offer a two-tiered analysis of what went wrong. At the more micro tier, we advance moral seduction theory, explaining why professionals are often unaware of how morally compromised they have...

Which matters more - beliefs about absolute ability or ability relative to others? This study set out compare their effects on self-evaluations, decisions under uncertainty, performance attribution, and perceived relevance of the task to one's self-concept. 415 participants were told they had gotten 20% correct, 80% correct, or were not given then...

Five experiments document biases in the way people predict the outcomes of interdependent social situations. Participants predicted that situational constraints would restrain their own behavior more than it would the behavior of others, even in situations where everyone faced identical constraints. When anticipating the effects of deadlines on out...

This collection explores the subject of conflicts of interest. It investigates how to manage conflicts of interest, how they can affect well-meaning professionals, and how they can limit the effectiveness of corporate boards, undermine professional ethics, and corrupt expert opinion. Legal and policy responses are considered, some of which (e.g. di...

Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisors’ conflicts of interest are disclosed. Sec...

This paper argues that self-interest and concern for others influence behavior through different cognitive systems. Self-interest is automatic, viscerally compelling, and often unconscious. Understanding one's ethical and professional obligations to others, in contrast, often involves a more thoughtful process. The automatic nature of self-interest...

Three studies explored the psychology of social prediction by examining negotiators’ predictions of the effects of time pressure and comparing those predictions with actual outcomes. The results show that revealing final deadlines in negotiation can lead to better outcomes for the negotiator with the deadline because revelation speeds concessions b...

Two experiments explored actual and predicted outcomes in competitive dyadic negotiations under time pressure. Participants predicted that final deadlines would hurt their negotiation outcomes. Actually, moderate deadlines improved outcomes for negotiators who were eager to get a deal quickly because the passage of time was costly to them. Particip...

Most theories of legal discovery assume that the sharing of information among disputing parties will lead to convergence of expectations and facilitate settlement. However, psychological research shows that shared information, if open to multiple interpretations, is likely to be interpreted egocentrically by the disputants, which can cause beliefs...

Four experiments explored the psychological processes by which people make comparative social judgments. Each participant chose how much money to wager on beating an opponent on either a difficult or a simple trivia quiz. Quiz difficulty did not influence the average person's probability of winning, yet participants bet more on a simple quiz than o...

Information about the financial health of public companies provided by auditors ideally allows investors to make informed decisions and enhances the efficiency of financial markets. However, under the current system auditors are hired and fired by the companies they audit, which introduces incentives for biases that favor the audited companies. Thr...

This paper benefited from the comments of Daniel Ilgen and two anonymous reviewers. This research was generously supported by the Dispute Resolution Research Center at Northwestern University and by the Stanford Graduate School of Business

On July 30, President Bush signed into law the Sarbanes-Oxley Act addressing corporate accountability. A response to recent financial scandals, the law tightened federal controls over the accounting industry and imposed tough new criminal penalties for fraud. The president proclaimed, "The era of low standards and false profits is over." If only it...

Traditional economic and decision-making models allow for "free disposal" of information, meaning that more information will always make a decision maker (weakly) better off. This implies that those faced with decisions should always place non-negative value on information. Building on previous research on the "curse of knowledge," we explore situa...

This study investigated whether cognitions and behavior in an asymmetric social dilemma can be predicted by national culture. Results indicated that, as predicted, groups of decision makers from Japan--a collectivist, hierarchical culture-were more cooperative, expected others to be more cooperative, and were more likely to adopt an equal allocatio...

Although traditional behavioral decision theory as applied to negotiation sheds light on some of the barriers encountered in negotiations, it does not fully account for many of the difficulties and failures to reach settlement in ideologically based disputes. In this article we identify a number of factors that differentiate ideologically based neg...

EXTENDED ABSTRACT In the 1970s, New York City installed buttons at intersections with traffic lights. Helpful signs instructed pedestrians: "To cross street, push button. Wait for walk signal." Pedestrians in New York routinely assume that pushing the button speeds the arrival of the walk signal. As it happens, their faith is misplaced. Since the l...

The first part of this paper traces a short history of the psychological study of negotiation. Although negotiation was an active research topic within social psychology in the 1960s and 1970s, in the 1980s, the behavioral decision perspective dominated. The 1990s has witnessed a rebirth of social factors in the psychological study of negotiation,...

Four experiments explore how situational constraints influence predictions and outcomes in negotiation. The results show a disconnect between predictions and actual outcomes. Evidence from Experiment 2 demonstrates that tight final deadlines can be strategically advantageous for the party with the heavier time costs. Both naive (Experiment 1) and e...

In January of 1999, leading negotiation scholars and practitioners gatheredat Northwestern University for a conference sponsored by the HewlettFoundation. Here, we chronicle a conversation that occurred regardingnegotiation research. Our diverse group consisted of people with backgroundsin social psychology, anthropology, sociology, and clinical pr...

What is the relationship between economic development and environmental protection? Mirroring the negotiations field of 15 years ago, the debate over this question has polarized into the opposing perspectives of win-lose (distributive bargaining) or win-win (integrative bargaining) outcomes. We argue that such polarization is both unnecessary and i...

Human ingenuity offers the best hope for tackling a whole range of environmental problems currently threatening global welfare, yet the human mind also creates cognitive barriers to wise environmental agreements. In this paper, we focus on a set of systematic cognitive barriers that are particularly endemic to environmental disputes. The fixed-pie...

This paper explores the consequences of cognitive dissonance, coupled with time-inconsistent preferences, in an intertemporal decision problem with two distinct goals: acting decisively on early information (vision) and adjusting flexibly to late information (flexibility). The decision maker considered here is capable of manipulating information to...

To understand why e-mail negotiations break down, we investigated two distinct elements of negotiators' relationships with each other: shared membership in a social group and mutual self-disclosure. In an experiment, some participants negotiated with a member of an outgroup (a student at a competitor university), whereas others negotiated with a me...

This paper explores the cognitive processes at work in preference generation. It tests the hypothesis that the evaluation process relies on a comparative context of alternatives. Participants in two experiments reviewed pairs of options that included one superficially attractive option and another that was normatively superior in some way but super...

This study examines the portfolio allocation decisions of 80 business students in a computer-based investing simulation. Our goal was to better understand why investors spend so much time and money on actively managed mutual funds despite the fact that the vast majority of these funds are outperformed by pas sively managed index funds. Participants...