What's the Big Idea? With Guests Robert Rydell and Don Moore

September 10, 2021
We often overestimate our abilities and the accuracy of our predictions. Is it better to have well-calibrated confidence beliefs?

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After you listen

With the exception of a brief bear market at the start of the COVID crisis, we’ve been in a bull market for the better part of a decade. That’s an environment that naturally breeds optimism among investors and traders.

With the exception of a brief bear market at the start of the COVID crisis, we’ve been in a bull market for the better part of a decade. That’s an environment that naturally breeds optimism among investors and traders.

When young children imagine their future lives, they're often very optimistic. They'll say things like "I'm going to be an astronaut!" or "When I grow up, I want to be a movie star!" These outcomes are, of course, quite rare. Most children will grow into slightly less exotic careers as adults. But even as adults, we tend toward personal optimism. We assume that we will outlive the average person, that we will remain in better health than the average person, and that our children will be above average in school or in sports. Of course, we can't all be above average.

In this episode of Choiceology with Katy Milkman, we look at the mistakes we make when we assume we're less susceptible to failure or negative outcomes than are other people.

World's Fairs are large scale events requiring an immense amount of planning and organization. And while there have been many memorable and successful fairs, there have also been many expensive failures. Robert Rydell tells the story of the 1926 Sesquicentennial International Exposition in Philadelphia. Organizers were certain that they could mount a spectacular event, one that would transform their city and burnish its reputation around the world. But international events, poor weather, local politics, and the death of one of the key planners would conspire to make this a fair to remember, for all the wrong reasons.

Robert Rydell is a professor of American Studies at Montana State University and the author of All the World's a Fair: Visions of Empire at American International Expositions, 1876-1916.

Next, Don Moore joins Katy to discuss the ways in which overconfidence, overplacement, and overprecision can cloud your judgement, even though it may make you feel better about yourself and your abilities.

Don Moore is the Lorraine Tyson Mitchell Chair in Leadership and Communication at the UC Berkeley Haas School of Business and serves as associate dean for academic affairs. He is also the author of the book Perfectly Confident: How to Calibrate Your Decisions Wisely.

Finally, Katy offers advice on using base rates to help offset over-optimism when it comes to planning events, starting a business, getting married, or renovating your home.

Choiceology is an original podcast from Charles Schwab. 

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