Do You Suffer From The Illusion of Superiority?
Answer these questions, yes or no:
- Are you an above average driver?
- Do you have an above average ability to judge humour?
- Does your professional judgement place you in the top half of your organisation?
If you are like most people, you will have answered yes to all three questions. Social psychologists call this the illusion of superiority, which suggests people have an unrealistically positive view of themselves. Remarkably, research shows the least capable people have the largest gaps between what they can do and what they actually achieve. In other words, the least competent are often the most confident.
The illusion of superiority is often combined with two other illusions: The illusion of optimism and the illusion of control.
The illusion of optimism makes people see their future as brighter than others.
The illusion of control makes people behave as if events are subject to their control.
These three illusions are probably driving CEO’s to continue to fuel multi-trillion dollar global mergers and acquisitions where most deals destroy rather than create value for the acquiring company.
To gain insight into how we consistently make bad decisions you should read Michael J Mauboussin’s latest book Think Twice (2010).
Mauboussin is Chief Investment Strategist at Legg Mason Capital management and adjunct professor of finance at Columbia Business School. He is also the author of the brilliant and acclaimed book More Than You Know.
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