Cause of misjudgment № 12
Excessive Self-Regard Tendency
We systematically overrate ourselves, our possessions, and our conclusions — most people sincerely believe they are above average.
Almost everyone overrates themselves. Surveys famously find that the large majority of people consider themselves above-average drivers, which is statistically impossible. The same inflation applies to our intelligence, our judgment, our past decisions, and even our stuff — Munger pointed to the “endowment effect,” where we value something more simply because we own it, as a face of this tendency. The self looks better from the inside than it is.
A more consequential form is overrating our own conclusions, which makes us reluctant to take advice or to check our reasoning. It also distorts hiring and judgment of people: interviewers overweight their gut impression of a candidate and consistently believe they can read character from a conversation, when the evidence says structured track records predict far better. Munger noted that the man who is wrong but confident is especially dangerous, and that excessive self-regard manufactures exactly that combination.
The constructive flip side is that you can harness the tendency: people take more pride in, and behave more responsibly toward, things they identify with, so cultures and brands that people feel they “own” earn real loyalty. But for clear thinking the rule is to assume you are overrating yourself, build in objective checks, and respect a good track record over a confident impression — your own included. Munger paired this with a hard-won humility: the way to acquire a good reputation, he said, is to try to be what you want to appear, because the self-flattery runs the other direction by default.
