7 Psychological Biases That Explain Every Bad Business Decision Ever Made

Overconfidence Bias: The Illusion of Invincibility

Overconfidence bias is characterized by an individual's unfounded belief in their own abilities, knowledge, or control over events. In business, this can lead to overly ambitious projects, underestimating risks, or ignoring potential pitfalls. Executives may overestimate their ability to predict market trends or the success of a new product, leading to costly mistakes. Overconfidence can also result in poor risk management, as leaders assume they can handle any challenge that arises. To counteract this bias, businesses should implement rigorous risk assessment processes and foster a culture where questioning assumptions is encouraged and valued.