Overconfidence

Confidence is an amazing thing. Because appearances are essentially all that matter, especially in circumstances of information asymmetry, confidence is an incredibly important for any leader or successful individual. The hazard of confidence, as this New York Times article by famed behavioral psychologist/economist, are when the individual starts believing his own inflated stories. Here were the more poigant parts:
The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and by the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable. The bias toward coherence favors overconfidence. An individual who expresses high confidence probably has a good story, which may or may not be true.

When a compelling impression of a particular event clashes with general knowledge, the impression commonly prevails. And this goes for you, too. The confidence you will experience in your future judgments will not be diminished by what you just read, even if you believe every word.

True intuitive expertise is learned from prolonged experience with good feedback on mistakes. You are probably an expert in guessing your spouse’s mood from one word on the telephone; chess players find a strong move in a single glance at a complex position; and true legends of instant diagnoses are common among physicians. To know whether you can trust a particular intuitive judgment, there are two questions you should ask: Is the environment in which the judgment is made sufficiently regular to enable predictions from the available evidence? The answer is yes for diagnosticians, no for stock pickers. Do the professionals have an adequate opportunity to learn the cues and the regularities? The answer here depends on the professionals’ experience and on the quality and speed with which they discover their mistakes. Anesthesiologists have a better chance to develop intuitions than radiologists do. Many of the professionals we encounter easily pass both tests, and their off-the-cuff judgments deserve to be taken seriously. In general, however, you should not take assertive and confident people at their own evaluation unless you have independent reason to believe that they know what they are talking about. Unfortunately, this advice is difficult to follow: overconfident professionals sincerely believe they have expertise, act as experts and look like experts. You will have to struggle to remind yourself that they may be in the grip of an illusion.

I've mentioned several times that I believe one of the primary practical differences between a narcissist and a sociopath is that a sociopath does not believe his own lies. Sociopaths are able to lie to others and also lie to themselves, but some compartmentalized version of them will always hold on to the truth, lest they make some of these mistakes of overconfidence or underestimation that are so apparent in our brother narcissists. I fully agree with the article, though, that the only real way to avoid the perils of overconfidence is to have some touchstone that allows you to verify the validity of a particular belief. For me, I like to have people around me whose opinions I trust. If they tell me something is or not so, I have to basically take them on their word, like playing a game of mental blind man's bluff where I'm being guided by one or more participants. Luckily I learned how to trust people in my early 20's, otherwise I don't know what I would do.