A decision maker believes their ability to predict outcomes is higher than it actually is. Which bias explains this?

• A. Overconfidence bias
• B. Availability bias
• C. Hindsight bias
• D. Anchoring bias

Answer: (A)

Overconfidence bias is when a person overestimates the accuracy of their judgments or predictions. In this scenario, the decision maker believes their ability to predict outcomes is higher than it actually is, which reflects this bias. They place too much trust in their own forecasts and not enough attention on uncertainty or the limits of their knowledge.

Availability bias would involve judging likelihood based on how easily examples come to mind, not overestimating one’s overall predictive accuracy. Hindsight bias makes people feel they could have predicted an outcome after it has occurred, which is about post-event judgment rather than pre-event confidence. Anchoring bias involves sticking to an initial reference point, not the general overconfidence in one’s predictive ability.