Overplacement bias

Over-placement is peoples’ tendency to think we rank higher than others on certain dimensions, particularly in competitive contexts. This can lead people to be too interested in coppering with others in negotiations, markets and court. “Better than average” effect illustrates this in practice. For example: 93% of American drivers report themselves to be better than the median American drivers.

Reference group

We select career paths, job assignments and hobbies based on our belief in our “unique” talents. Human beings get involved in situations and compete where they think they are distinctively good. However, there is a problem with this. We neglect the reference group and fail to appreciate that we will be among a select group of others, who are just like use.

Evaluating themselves to others in absolute sense, relative to population at large rather than computing themselves to the specific group which they belong to, people fail to understand reference group. We exaggerate our own abilities and limitations, failing to consider the fact that others face similar opportunities and challenges.

Undesirable consequences

Over-placement results in inflated expectations that we will be victorious in e.g. lawsuits and court battles. As a result, we fight too hard and hold out too long, paying lawyers too much to fight for us.

Mistakes of over-placement leads entrepreneurs to throw away their life savings into ventures that fail. When they realise they are no better than other entrants, individuals end up broke.


On the other hand, sometimes people tend to believe they are worse than others on various dimensions. Often this is present when individuals face difficult tasks. We tend to believe to perform worse than others on hard tasks and better than others on easy tasks. This results in missed opportunities because some, being afraid to be worse than others, have no courage to trying. Additionally, human beings believe they are more likely than others to experience common events but less likely than others to experience rare events.

Adapted from

Bazerman, M.H. and Moore, D.A., 1994. Judgment in managerial decision making (p. 226). New York: Wiley.

Multiple selves theory

Decision making is a cognitive process. Humans make errors because of motivational and emotional influences. Learn more about multiple selves here.

Hyperbolic discounting definition

Economic concept of discounting states that any choice that involves a trade off between current and future benefits should discount the future.

Self-interest bias definition

Perceptions and expectations are biased in self-serving manner. When presented with identical information, we perceive situation in different ways.

How emotions affect decision making?

Specific emotions influence our decision making. This is an effect of positive and negative moods. Good or bad mood results in more biased judgements.

Three main types of overconfidence

Overconfidence effects are some of the most potent, pervasive and pernicious of any biases. It is blamed for wars, stock market bubbles, strikes, lawsuits, bankruptcy, failure of merges and acquisitions, high rates of entrepreneurial entries and other. Overconfidence facilitates many of biases. We continue to believe that our judgements and believes are correct, despite copious…

Overprecision causes and consequences

Tendency to be sure judgements and decisions are accurate, uninterested in testing assumptions and dismissive evidence that suggests we might be wrong.

Overestimation meaning

Tendency to think that we are better, smarter, faster, more capable, more attractive, more popular (and so on) than we actually are.

Emotionally drained relationship

These relationships can be very destructive. They slowly drain off our energy, frustrate us, and generally make for an unhealthy negative environment.

Healthy relationships

They contribute to your overall well-being and sense of feeling valued. Here, people genuinely like and admire many of the qualities the other has.

How to build a better relationship?

Several skills are involved in building relationships that are satisfying and nurturing. You must be prepared to make some effort to keep them going.


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