This video introduces the behavioral ethics bias known as overconfidence bias. The overconfidence bias is our tendency to be more confident in our ability to act ethically than is objectively justified by our abilities and moral character. Overconfidence bias may affect our ability to make the most ethical decision. Awareness of the overconfidence bias is especially important for people in leadership positions.
To learn about related behavioral ethics concepts, watch Ethical Leadership, Part 1: Perilous at the Top and Being Your Best Self, Part 2: Moral Decision Making. For a closer look at how overconfidence bias affected the behavior of former lobbyist Jack Abramoff, watch .
The case study on this page, “Approaching the Presidency: Roosevelt & Taft,” explores the role of overconfidence bias in the role of president. For a related case study about the perils of the overconfidence bias for a leader of a major corporation, read “Dennis Kozlowski: Living Large.”
Terms defined in our ethics glossary that are related to the video and case studies include: overconfidence bias, moral reasoning, and moral psychology.
Behavioral ethics draws upon behavioral psychology, cognitive science, evolutionary biology, and related disciplines to determine how and why people make the ethical and unethical decisions that they do.Much behavioral ethics research addresses the question of why good people do bad things. Many behavioral ethics concepts are explored in detail in Concepts Unwrapped, as well as in the video case studyIn It to Win: The Jack Abramoff Story.Anyone who watches all (or even a good part) of these videos will have a solid introduction to behavioral ethics.
The latest resource from Ethics Unwrapped is a book, Behavioral Ethics in Practice: Why We Sometimes Make the Wrong Decisions, written by Cara Biasucci and Robert Prentice. This accessible book is amply footnoted with behavioral ethics studies and associated research. It also includes suggestions at the end of each chapter for related Ethics Unwrapped videos and case studies. Some instructors use this resource to educate themselves, while others use it in lieu of (or in addition to) a textbook.
Cara Biasucci also recently wrote a chapter on integrating Ethics Unwrapped in higher education, which can be found in the latest edition ofTeaching Ethics: Instructional Models, Methods and Modalities for University Studies. The chapter includes examples of how Ethics Unwrapped is used at various universities.
The most recent article written by Cara Biasucci and Robert Prentice describes the basics of behavioral ethics and introduces Ethics Unwrapped videos and supporting materials along with teaching examples. It also includes data on the efficacy of Ethics Unwrapped for improving ethics pedagogy across disciplines. Published inJournal of Business Law and Ethics Pedagogy(Vol. 1, August 2018), it can be downloaded here: “Teaching Behavioral Ethics (Using “Ethics Unwrapped” Videos and Educational Materials).”
An article written by Ethics Unwrapped authors Minette Drumwright, Robert Prentice, and Cara Biasucci introduce key concepts in behavioral ethics and approaches to effective ethics instruction—including sample classroom assignments. Published in theDecision Sciences Journal of Innovative Education,it can be downloaded here: “Behavioral Ethics and Teaching Ethical Decision Making.”
A detailed article written by Robert Prentice, with extensive resources for teaching behavioral ethics, was published inJournal of Legal Studies Education and can be downloaded here: “Teaching Behavioral Ethics.”
Another article by Robert Prentice, discussing how behavioral ethics can improve the ethicality of human decision-making, was published in theNotre Dame Journal of Law, Ethics & Public Policy. It can be downloaded here: “Behavioral Ethics: Can It Help Lawyers (And Others) Be their Best Selves?”
A dated (but still serviceable) introductory article about teaching behavioral ethics can be accessed through Google Scholar by searching: Prentice, Robert A. 2004. “Teaching Ethics, Heuristics, and Biases.”Journal of Business Ethics Education1 (1): 57-74.
Written and Narrated by
Robert Prentice, J.D.
Department of Business, Government and Society
McCombs School of Business
The University of Texas at Austin
“Good character can be undermined by overconfidence. David Brooks wrote in his book, The Social Animal, that human minds are “overconfidence machines,” and the psychological literature bears that out. A substantial majority of people believe erroneously that they are better than average drivers, more likely to be able to afford to own a house than their peers, and more accurate eyewitnesses than most other people.
Entrepreneurs like Bernie Ebbers of WorldCom and Richard Scrushy of Health South, who built small, obscure companies into economic powerhouses, may gain a sense of invulnerability through a series of successes. Their minds underplay any role that luck had in their success. Indeed, a 2012 Empirical study indicated that overconfident executives with unrealistic beliefs about their future performance are more likely to commit financial reporting fraud than other executives. Essentially, they are more likely to get themselves into predicaments where committing fraud seems the only way to deliver on their promises.
People’s irrational overconfidence also applies to the ethical correctness of their acts and judgments. In one survey, more people thought that they would go to heaven than Mother Teresa would! Other individuals surveyed reported that they were twice as likely to follow the Ten Commandments as other people. In fact, 92% of Americans report that they are satisfied with their own character.
This same overconfidence manifests itself in the workplace, where impossibly high percentages of people believe that they are more ethical than their competitors and coworkers. In one study, 61% of doctors believed that the “freebies” given out by pharmaceutical companies affected the judgement of other physicians, but only 16% believed that their own judgement was similarly affected.
Most of us simply assume that we are good people and therefore we will make sound ethical decisions. This overconfidence in one’s own moral compass can lead us to make decisions without any serious ethical reflection. When hints of the Enron scandal first began to appear in the press, Enron employees’ overweening confidence in the competence and strategies of their company, often named the “most innovative” in America, caused them to express surprise and indignation that anyone would question the ethicality of many of the firm’s actions. Any outsider who questioned Enron’s tactics or numbers was told that they “just did not get it.” That is ethical overconfidence in action, and it is part of the reason that Enron no longer exists.”
Brooks, David. 2011. The Social Animal: The Hidden Sources of Love, Character, and Achievement. New York: Random House.
Dana, Jason, and George Loewenstein. 2003. “A Social Science Perspective on Gifts to Physicians from Industry.” Journal of the American Medical Association 290 (2): 252-255.
Jennings, Marianne M. 2005. “Ethics and Investment Management: True Reform.” Financial Analysts Journal 61 (3): 45-58.
Libby, Robert, and Kristina Rennekamp. 2012. “Self-Serving Attribution Bias, Overconfidence, and the Issuance of Management Forecasts.” Journal of Accounting Research 50 (1): 197-231.
Sharot, Tali. 2011. The Optimism Bias: A Tour o the Irrationally Positive Brain. New York: Pantheon Books.
Tugend, Alina. 2013. “When You Don’t Do What You Meant To, and Don’t Know Why.” New York Times, January 25.
