Be less scared of overconfidence

I frequently see people leaning heavily on this type of low-information heuristic to make important decisions for themselves, or to smack down overconfident-sounding ideas from other people.

• This startup is growing incredibly fast and the founders are some of the most effective people I’ve ever met, but at their current VC valuation, the total comp is lower than my Big Tech job so I can’t justify the move.
• I think I could have a big impact as an academic researcher, but most grad students end up depressed and don’t land a tenure-track position, so it’s not worth trying.
• You’re going to start a company? Are you aware that 90% of startups fail? What makes you think you and your ragtag band of weirdos are the chosen ones?
• Who are you to be sounding the alarm about a pandemic when every past alarm has been false and all the reputable, top-tier experts say not to worry?

These all place *way* too much weight on the low-info heuristic.

What’s worse, these low-info heuristics almost always push in the direction of *being less ambitious*, because the low-info view of any ambitious project is that it will fail (most projects run behind schedule, most startups fail, most investors underperform the market, etc.).

The problem is that the bad consequences of underconfidence and under-ambition are severe but subtle, whereas the bad consequences of overconfidence and wishful thinking are milder but more obvious. If you’re overconfident, you’ll try things that fail, and people will laugh at you. If you’re underconfident, you’ll avoid making risky bets, and miss out on the potential upside, but nobody will know for sure what you missed.

That means it’s always tempting to do what the low-info heuristic tells you and be less ambitious—but ultimately, that ends up being worse for the world.