A study which has been published in the journal Scientific Research says that many professionals including business executives, bankers and physicians are overconfident, and they might be carrying this bias since early childhood.
Children as young as 4-years-old, may have excessive belief in their own ability despite clear evidence to the contrary is present and persistent in children as young as four.
“Much of our knowledge on judgment and decision-making is based on adult participants but there is no reason to believe that humans only develop such an omnipresent cognitive illusion once we reach adulthood,” said Dominik Piehlmaier, study co-author from the University of Sussex.
“My findings indicate that effective interventions that increase an individual’s knowledge about their own knowledge and its boundaries might be needed to target much younger individuals if one wants to efficiently calibrate a person’s irrational confidence,” Piehlmaier said.
In the study, children were asked to play a card game known as the Children’s Gambling Task where they chose cards from one of two packs. The card was then turned over to reveal how many stickers the participant won and lost.
One pack had cards with significantly higher wins and losses than the other. In the game, children had to decide at intervals whether they thought they would win more, about the same, or fewer stickers than previously in the game.
Each participant started off with four stickers after the initial six practice trials, the scientists said. On average, they said, every participant gained 0.3 stickers per turn and left the game with an average of 6.67 stickers, ranging from zero to 33. More than 70 per cent of four-year-olds and half of all five and six-year-olds were overconfident in their expectations after playing ten turns and six practice trials, the study noted.
“The Children’s Gambling Task closely resembles a very simplified version of the financial markets with relatively safe options providing low but steady average return rates and highly risky assets that promise much higher short-term gains with a catastrophic long-term yield,” Piehlmaier explained.
“The finding that overconfidence is persistent even in the face of own shortcomings mirrors results from previous studies that looked at the performance of investors,” he said.