Instead, people come up with what they believe to be logical estimates of the plane’s weight and moon’s diameter, then they adjust from those figures to arrive at their brackets. But unless you work for Boeing or NASA, your initial estimates are probably going to be wildly off the mark, so the brackets should be wider they probably are — say, from one pound to one billion pounds for the plane’s weight and from one mile to a billion miles for the lunar diameter. That most people do not default to such broad ranges reflects a trait that behavioral economists call overconfidence. This is not run-of-the-mill arrogance, but rather the tendency we all have to overrate our abilities, knowledge and skill, at whatever level we might place them.

Studies have revealed significant overconfidence in the judgments of scientists, lawyers, engineers, doctors and those in other professions. The University of Pennsylvania psychologists Philip Tetlock and Barbara Mellers collected more than 25,000 forecasts from people whose job it was to anticipate how the future would unfold. All demonstrated remarkable overconfidence. When they were 80 percent sure of their predictions, they were correct less than 60 percent of the time.

Another example is shown in a 2012 study from the State Street Center for Applied Research, in which investors were asked about their financial acumen.

“Nearly two-thirds rated their financial sophistication as advanced,” said Mirtha Kastrapeli, a senior research analyst at State Street. “This seemed a little optimistic, so in our 2014 study, The Folklore of Finance, we ran a financial literacy exam. The average score was just 61 percent, barely a passing grade. This disconnect between actual and perceived financial sophistication, she explains, is evidence of how widespread the overconfidence bias is.”

Optimism Bias

Overconfidence is hard-wired into our brains because it is useful. Many of our mental biases evolved because they make us cautious or they otherwise protect us from harm, but overconfidence is part of a suite of cognitive traits that serve to propel us forward. Just as no one would think to write a children’s book about a train engine that repeats, “I think I can’t,” few explorers would venture into the wild — and few entrepreneurs would start new businesses — unless they believed that they would succeed in the face of long odds.

A bias toward optimism helps to explain why many, if not most, smokers are confident that they will not develop cancer; why many drivers are certain that their texting will not lead to an accident; and why many investors believe they can outperform the market. “We are evolutionarily programmed to believe that things will work out,” said David Hirshleifer, a finance professor at the University of California, Irvine.

Hindsight Bias

More confounding than the existence of investor overconfidence is its persistence: As markets teach us costly lessons, we should grow humble. But the fact that many do not reflects what Professor Hirshleifer describes as self-enhancing psychological processes. One of the biggest esteem builders is hindsight bias, or the tendency to rewrite our own history to make ourselves look good. In landmark experiments by the psychologist Baruch Fischhoff, then at Hebrew University, study participants were directed to make predictions about real-life events, then were asked periodically to recall the events and their predictions after the fact. His findings? Participants consistently misremembered their forecasts, in ways that made them look smarter. Too often we look back not in anger but in awe, at least of our own capacities.