For years, psychologists have observed that people routinely overestimate their abilities, said study leader Dominic Johnson, an evolutionary biologist at the University of Edinburgh in Scotland.
Some experts have suggested that overconfidence can be a good thing, perhaps by boosting ambition, resolve, and other traits, creating self-fulfilling prophecies.
But positive self-delusion can also lead to faulty assessments, unrealistic expectations, and hazardous decisions, according to the study—making it a mystery why overconfidence remains a key human trait despite thousands of years of natural selection, which typically weeds out harmful traits over generations.
Now, new computer simulations show that a false sense of optimism, whether when deciding to go to war or investing in a new stock, can often improve your chances of winning.
Overconfidence Pays Off When Costs Are Low
Johnson and colleague James Fowler, of the University of California, San Diego, developed a model using evolutionary game theory to explore how individuals with different strategies perform in competition with each other.
In the model two imaginary individuals, X and Y, stake claims for resources. If both claim the resource and fight over it, the stronger individual wins and gains the resource. Both individuals pay a cost for fighting over it. If only one claims the resource, he gets it for free. If neither claims it, neither gets anything.
Johnson also noted two important twists: The virtual competitors may either overestimate or underestimate their real strength. Secondly, there may be uncertainty, or a degree of error in how a competitor perceives his opponents’ strength.
Based on these factors, a person then “decides” whether or not to claim the resource, while risking a fight if the other individual also claims it. They base their decision on their own perceived strength compared with how strong they believe their opponent to be.
“The beauty of the model is it captures a lot of types of human competition,” said Johnson, whether it’s arguing a court case or fighting over resources such as territory.
The team ran simulations over thousands of generations with individuals who had varying levels of overconfidence and varying levels of error in their assessments of others, and observed which strategies were effective. As with physical evolution, advantageous strategies “survived”—or were naturally selected—and were passed down to the next generation.
The results, published today in the journal Nature, showed that overconfidence pays off only when there is uncertainty about opponents’ real strengths, and when the benefits of the prize at stake is sufficiently larger than the costs.
According to Robert Trivers, an expert in social evolution at Rutgers University, overconfidence may have another benefit, at least for men.
Men tend to exhibit more false optimism than women, a trait that can help in their two traditional evolutionary roles: fighting rivals and courting women.
In both situations, men are partly evaluated by their degree of self-confidence, Trivers said. During a fight, for example, false bravado may make a foe back down.
This is a good example that even false beliefs can accumulate to be part of evolution process. However, false optimism works out temporarily, when the stake is low or when among a bunch of under confidents. It is hard to believe baseless optimism can last generations, unless the parties agreed to divide interests.