Economics, 3rd Edition

People are Overconfident

Imagine that you were asked some numerical questions, such as the number of African countries in the 

United Nations, the height of the tallest mountain in Europe and so on. Instead of being asked for a single 

estimate, however, you were asked to give a 90 per cent confidence interval – a range such that you were 

90 per cent confident the true number falls within it. When psychologists run experiments like this, they 

find that most people give ranges that are too small: the true number falls within their intervals far less 

than 90 per cent of the time. That is, most people are too sure of their own abilities.

---

CHAPTER 5  BACKGROUND TO DEMAND: THE THEORY OF CONSUMER CHOICE  127