Why you should lean on overconfidence

The success rate of getting a job at FAANG (Facebook, Amazon, Netflix, Google) is around 1% of all applicants. When I was studying and apply to these companies, the general consensus was that it is too hard and only the chosen few can get in. Just to remind you a bit this was after the 2020 zero interest rate phase where everyone and their mom was getting an interview. If i let the consensus get to me i would never invest in the time it takes to really lock in and start preparing for this, in my head it would just be an apply and pray mechanism.

There are situations where being slightly overconfident is rational not because you know you will succeed, but because underconfidence causes you to reject opportunities before you have enough information to know whether they could work, let’s go into another example

I will tell you another story about Arsenal Fan TV which is one of the biggest fan medias on youtube and set in motion a revolution where now all the major TV channels follow the fan first model, robbie lyle who is a normal arsenal fan one day decided to turn up with a mic and a camera and started recording. In another alternate reality if he was underconfident about that decision there would have been no fan media on youtube. His decision to not go with the normal route of conforming to not being overconfident would have dissuaded him from taking a decision where the information was so little

Not enough information to make said decision: When you are not the most knowledgeable person in the field that you want to take said decision in it’s pretty difficult to know which path is the best path. If I google right now I want to start a company, the internet tells me only 5% of people succeed. Now if i am underconfident and want to avoid the risk of looking like a fool i do not take said decision. But in cases where the information is not sufficient, going down the road of the risky decision often leads you down failure which builds muscle to take such decisions in the future.

Bias: There are tons of biases that exist when making a decision, for example regret aversion, the fear of the pain of future regret more than you value a positive outcome. This makes you hesitate because you worry you will pick the wrong path or the ambiguity effect, where you are afraid of taking a choice where the probabilities are unknown. These biases are not conscious but rather subconscious, you do not even know you are getting affected by them until it’s too late.

The obvious objection is the planning fallacy. People routinely underestimate how long projects will take, how much they will cost, and how difficult they will be. Overconfidence can absolutely destroy judgment. But the correction for that isn’t necessarily pessimism. It is to separate confidence in taking the bet from confidence in predicting the outcome.

If you as a person decide to not take that plunge and fail,in hindsight over a large time horizon you start to notice that you are falling behind without your friends/family ever knowing the risks you are not taking and the mediocrity you are drifting towards.

We tend to measure the cost of the risks we take because their failures are visible. We rarely measure the cost of the risks we refuse to take, because nothing visibly happens. But over a decade, those invisible decisions compound too.