Confidence matters. We are much more likely to act in situations when we are confident. We make purchases based on confidence. We are also persuaded by others based on their confidence. A statement made confidently and forcefully is much more likely to sway our opinion than a statement that is hedged.
Presumably, the power of confidence lies in the belief that when people are more confident in an outcome they are more likely to be correct in their predictions.
There have been many studies over the years that demonstrate that people tend to be overconfident in their judgments about how likely they are to be correct about a prediction or an answer to a question. But what causes this overconfidence?
A 2008 paper by Claire Tsai, Joshua Klayman, and Reid Hastie in Organizational Behavior and Human Decision Processes suggests one factor that makes people overconfident. They find that as people get more information about a judgment they are making, it increases their confidence, even if it does not increase the accuracy of their judgment.
In one study in this paper, they found experts in college football and asked them to predict the outcomes of a number of games. The names of the schools playing the games were not given. Instead, people were given information about how the teams had performed to that point in the season on a variety of aspects of performance that are useful for predicting the outcome of a game (like the average number of yards that the teams had gained in their games so far that season).