Theres more than one way of getting things done. Good managers do

There's more than one way of getting things done. Good manage
rs do it every day. However, there's something about how leader
s work that sets them apart. An effective leader influences those
around them, turning complex problems into simple solutions.
But not for the sake of their own ego. Let's look at some scenari
os.
[MUSIC PLAYING]
Steve, where are the new product sales? The board is setting
the department's budget tomorrow, at 8:00
AM, based on this report.
I know. I'm sorry. I stuffed up.
I need a solution. Well? We need to act today.
Melinda has the data I left out.
Call her.
She's on leave.
Find someone else with the data. There must be someone.
I don't know.
The board has a full report tomorrow at 8:00 AM.
It'll be there.
Steve, you left out the new product sales. The board needs this
by 8:00 AM tomorrow.
I'm sorry. I know I stuffed up.
OK, let's think solutions.
I can't believe I've done this.
Don't worry about that for now. Who else has the data?
Melinda.
Great, call her.
She's on leave.
Somebody else must have the data. Think of the broader group,
of the other people you worked with on this.
Suzie, but she's in a meeting all afternoon. Can you get
her, by close of business?
I'll find a way.
Brilliant. If you hit a wall, come and see me.

I will. Thanks, Amanda.
Effective leaders work with and through people. Taking them in
the right direction, where everyone benefits. During a crisis, th
ey utilize these skills to great effect. Lisa or Amanda, which are
you more like?
[MUSIC PLAYING]
We've all been dealing with the new client. But I was the one w
ho clinched the deal so, according to the rules, it's my account.
I'm just concerned that this is causing conflicts. I know others r
eally wanted this client.
Conflict how?
Resentment, jealousy, difficult work environment. But you
made it clear this was the opportunity you've been waiting for.
Oh, it is. It's great. But--
It's only natural others are going to feel negatively towards you
for a while.
To be honest, I hadn't expected it.
Look, Kathy, you have to realize being ambitious has its pitfalls
. Not everyone is going to be your best friend.
These are people I've worked for a long time.
The price you pay. It'll be fine, trust me.
I keep telling myself, it'll be fine. But it's not.
What kind of conflict?
Resentment, jealousy, difficult work environment.
This
is Disappointing news. Your positive this is all happening on th
e back of your new client?
I'm sure. I feel isolated. People are treating me differently.
In what ways?
Less engaged, indifferent.
But nothing specific you can think of?
The vibe just feels wrong.
OK, these feelings are entirely legitimate. Is it possible you're p
rojecting some of your stress?
I don't understand.
Well, sometimes we perceive situations more negatively than th

ey actually are. It's also possible that they've noticed a change i
n your behavior.
I hadn't thought of that.
Don't be afraid to talk it over with them. It's not easy when ther
e's a change in management.
Over the last 20 years, we've seen the role of
the leader change dramatically. Intangibles, such as employee m
orale and emotional well being, are now integral to successful o
rganizations. Leaders who ignore or underestimate the human as
pect do so at their own peril.
[MUSIC PLAYING]
One of
the constant dilemmas leaders face is how to manage their empl
oyees. Too much management, and staff can feel throttled and d
isempowered. Too little, and they can feel lost and unproductive
. Effective leaders find a balance. They provide opportunity for
innovation and emerging leadership, but do so within a context t
hat ensures a desirable outcome.
I went through the brief, and I've got some ideas for a new appr
oach.
We had a similar program last time that was
very popular. Take Steve aside and brainstorm some fresh mark
eting campaign.
Sure. I was actually hoping to use social media as a new platfor
m, rather than newspapers, TV, and radio. My concern is the wa
y people, nowadays, are accessing information.
Sounds risky. There's a lot riding on this.
Absolutely. I've already prepared a strategy for Steve to look at.
Look, the new budget doesn't have any room for this.
Even though a number of our competitors already have a large o
nline presence?
That might be, but my hands are tied.
This could open up a whole new market.
Yes, that's one point of view. The other is that we're already
very successful in the markets we already know.
I'd be happy to go over the information I already have.

Look, I'm all for new ideas, but not at the expense of ones that
already work well.
This is a completely new direction for us.
I know, I've developed a strategy for Steve to look at.
It's good. Very detailed.
Thanks. I think we'd be missing out on a whole new audience if
we didn't branch out.
And you're confident that this is the right approach for us?
There's risk, but minimal. We've fallen behind in new media, so
we'll need to make a leap at some stage.
OK. Let's update last years marketing strategy as a plan B.
Resource wise, we'd struggle.
Yes, there's very little room in the budget for new ventures. Ho
wever, I could get together a small team to work on the update.
That would be great.
But I want you to lead them.
What about social media?
Steve and I will oversee it. But I want you
to work with Melinda and the rest of the team. Steve should also
be involved in
the discussions, as he is our IT person. I realize this is your idea
. And I'm impressed with the work that you've done. But Steve h
as an IT background. And I need to see the allocation the money
.
I was really hoping for a new challenge.
This is it. You've already proven your innovation. And I'm expe
cting that you'll do the same with the tasks that I've set you.
I hope so.
Look, if we can accomplish both strategies, it'll be a great achie
vement for everyone involved.
I'll see
if any improvements can made to last year's marketing. I'm sure
there will be.
Great. Let's meet again in two weeks. That gives
us a week before the launch of the campaign.
If Steve or I get stuck, we'll be sure to get you involved.

I'd appreciate that.
Leadership is undoubtedly challenging. Change can be rapid and
unpredictable. But even under pressure, an effective leader is a
ble to create an aura of excitement, through meaningful activitie
s that make a difference. They also realize that not everything r
ests on their shoulders. The overall goal is most important, not
who takes the spoils.
[MUSIC PLAYING]
It's an age old question, are leaders born or made? Well not ever
yone might agree, the answer is a simple one. Anyone can learn
the habits and skills necessary for leadership.
Here you go.
Hi, Kathy. Take a seat.
Thanks.
So it's been two weeks. How's the campaign coming along?
To be honest, it's a struggle. I don't think I'm cut out
for leadership.
Really? What's been the biggest challenge?
All of it, engaging staff, pulling resources together, keeping my
cool. I need help.
I'm happy to assist you where I can. But do you feel you should'
ve come to me earlier?
Probably. I guess I was trying to prove I could do it on my own.
Which can happen. I've been guilty of it myself.
I look at you, and you have it all together. People are motivated
. They listen. You get things done. I don't have any of that.
First, you have the desire to lead. That's a good start. Second, w
hat you see with me is an accumulation of many years of learnin
g.
But you make it seem so natural.
After a while, perhaps. I've gradually honed my leadership skill
s, a lot of false starts and mistakes, a lot of dark days.
So what can I do?
I really want to make this work. Maybe by trying so hard, you're
clouding your judgment. Take time to observe your team. Learn
what makes them tick. Ensure they always know where you're t

aking them.
And if they don't like the direction?
This sounds corny, but you need to create an atmosphere where
they feel like they're missing out by not following you and the r
est of the team.
I'm not charismatic like that.
You don't have to be. It's about being assertive and confident in
the direction you're taking and open to learning from those arou
nd you. Some very successful leaders understand the limelight i
s not always on them.
I think they're beginning to sense my desperation. Maybe it's to
o late to re-energize them.
OK, the process wasn't perfect. But you've got a great opportuni
ty in the next two weeks. Learn as much as you can for next tim
e. I might take another look at this strategy and where we're at
and then talk it over with you, if that's OK?
Of course, I'm glad you came and
asked for help. Humility is an important trait in a leader.
Thanks for everything. I really appreciate it.
You're welcome. And Kathy, I know you'll find your feet soon.
Be patient.
Across history, leadership has undergone many transformations,
from the inspirational orator to the tough minded operator. The
current ideal of a successful leader is one that is less domineeri
ng and more in harmony with those around them.
Every leader will bring their own personal style to the role. But
those who are self-
aware, flexible, able to acknowledge their own limitations, and
understand what drives humans have the best chance, in the lon
g term. Way to go team. That's a wrap.
[MUSIC PLAYING]
58

https://doi.org/10.1177/0008125621992173
California Management Review
2021, Vol. 63(3) 58 –69
© The Regents of the
University of California 2021
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/0008125621992173
journals.sagepub.com/home/cmr
Leadership
Perfectly Confident
Leadership
Don A. Moore1
SUMMARY
The leadership literature is replete with admonitions that
successful leadership
requires confidence. While that may be true, striving for greater
confidence runs
the risk of overconfidence. Overconfident leaders put
themselves, their teams, and
their organizations at risk. There are reasons to be skeptical that
greater confidence
improves performance, and substantial reasons to worry that
greater confidence
can undermine preparation. This article offers suggestions to
avoid being fooled by
overconfident charlatans. It also offers strategies for wise and
honest leaders who
would like to be both confident and truthful.
KeYwoRdS: leadership, decision biases, decision-making,

psychology,
entrepreneurship, ethics
O
n September 9, 2020, a reporter asked Donald Trump to jus-
tify his misleading assurances to the nation that the coronavi -
rus pandemic was under control. He replied, “Certainly I’m not
going to drive this country or the world into a frenzy. We want
to show confidence. We want to show strength, we want to show
strength as a
nation. That’s what I’ve done.”1
Regardless of what you think of Trump’s handling of the
coronavirus pan-
demic, every leader faces a dilemma between telling the truth
and expressing
confidence. We take comfort in leaders’ assurances that we will
succeed, that the
future is bright, and that our cause will ultimately be
vindicated. But the leader
who gives false hope can be exposed as hypocritical,
incompetent, or delusional.
How should a leader walk that line?
Many believe, as did Trump, that leaders must express
confidence. “One of
the most important qualities of a good leader is optimism,”
Disney CEO Robert
Iger wrote in his memoir, The Ride of a Lifetime. “People are
not motivated or ener-
gized by pessimists.”2 In order to attract investors, employees,
and customers, a
leader should express confidence in the company, its products,
and its mission.

1University of California, Berkeley, Berkeley, CA, USA
992173CMRXXX10.1177/0008125621992173California
Management ReviewPerfectly Confident Leadership
research-article2021
https://us.sagepub.com/en-us/journals-permissions
https://journals.sagepub.com/home/cmr
Perfectly Confident Leadership 59
The leader’s confidence attracts support, as when Steve Jobs
wooed loyal Apple
fans with his promotion of “insanely great” products, or when
SpaceX CEO Elon
Musk announced his plan to begin human colonization of Mars
by 2024.3
Confidence and Performance
Research does indeed suggest that confident people are more
likely to be
elevated to positions of status and leadership. We trust them in
part because we
rely on the presumed positive correlation between confidence
and performance.
We behave as if we assume that their confidence portends future
success.
There is good reason to believe in the power of confidence. All
around us,
we see the correlation between confidence and performance.
Confident athletes
are more likely to win. Confident candidates are more likely get
elected.4 And

more confident businesspeople are more likely to succeed. But
we should inter-
pret these correlations with caution, remembering the dictum
that correlation is
not causation.
Just because two things are correlated does not mean one causes
the other.
Companies with large corporate headquarters find themselves
defendants in more
lawsuits than do small firms, but those lawsuits are not the
cause of their size. A
correlation can result from some third variable that affects both
of them. In the
case of confidence, it is entirely possible—and likely, as I have
found—that a con-
founding variable, such as talent, strength, or ability,
contributes to both confi-
dence and to success.
Controlled experiments are necessary for testing causal
relationships.
Experiments eliminate the causal ambiguity that constrains
correlational studies
by directly varying the variable being tested while leaving other
things constant.
An experiment randomly assigns individuals to experimental
conditions, in which
the conditions differ only with respect to the independent
variable—the variable
the experiment is designed to test. Random assignment renders
it unlikely that
the conditions differ systematically, other than in the
experimental treatment.
Research has tested the causal effect of confidence on

performance.5
Researchers began by asking people when they thought
confidence improved
performance most. Among the things they said was they thought
confidence
boosted performance on tests like math tests. So researchers put
this hypothesis
to the test.
The experiment had three conditions. The first two conditions
manipulated
the confidence of participants. Participants began by taking a
pre-test and answer-
ing some survey questions. The high-confidence condition
induced confidence by
telling participants that their pre-test performance predicted
they would perform
well on the math test. Those in the low-confidence condition
expected to perform
poorly. No surprise, then, that those in the high-confidence
condition had higher
expectations than did those in the low-confidence condition.
CALIFORNIA MANAGEMENT REVIEW 63(3) 60
Participants assigned to a third “observer” condition learned
about the two
experimental conditions and the manipulation. They learned that
people in the
two main conditions had been randomly assigned to get the
encouraging or dis-
couraging message. Researchers were careful to verify that they
understood the
random assignment, and that participants in the two conditions

did not differ with
regard to underlying math skill. Observers were to bet on how
the test-takers
would perform on the math test. The observers were ready to bet
on the
optimists.
However, contrary to their naïve expectations, there was no
difference in
performance between those induced to have high vs. low
confidence. That is, in
the absence of actual difference in ability, attempts to
manipulate confidence did
not have a significant effect on performance, even though our
participants
expected it to.
Because a math test might not have given confidence its best
chance to
shine, the researchers conducted additional experiments using
different tasks.
These included trivia quizzes, perceptual tasks, tests of athletic
performance,
physical endurance, and even boring visual tasks. Despite these
efforts, evidence
failed to support the claim that greater confidence causes
stronger performance.
And yet, observers expected confidence to heighten
performance on each task.
The results suggested that, at least in the situations we studied,
people tend to
exaggerate the performance benefits of optimistic expectations.
Confident Leaders
I cannot claim that confidence never contributes to

performance. Indeed,
there must be some times when it does, such as when greater
confidence per-
suades you to enter a competition that you win. Confidence can
also contribute
to your success when it earns you credibility with others.
Research shows how
confident displays can boost others’ faith in you as a leader.6 It
leads others to
think that you know the path forward to and can help the group
be successful.
Confidence is also intimately bound to the exercise of
leadership. Even if
confidence does not actually influence your performance, it can
increase others’
faith in you as a leader. In times of crisis like the global
pandemic in which we find
ourselves, the yearning for confident leaders is particularly
poignant. We want
people who can guide us out of our predicament. The problem is
that would-be
leaders can fake confidence, displaying more bravado than
ability. Demagogues
and charlatans may attempt to fulfill our yearning by pretending
they know what
the future holds.
Honest leaders know that the future is uncertain. The future is
best thought
of as a distribution of possible outcomes, some more likely than
others. Mapping
that uncertainty allows you to place smart bets that maximize
expected value or
minimize the expected loss. Listen for leaders’ acknowledgment
of this uncer-

tainty as a bellwether of trustworthiness. All of us should
want—and ultimately
need—leaders with the courage to confront uncertainty and use
it to make wise
decisions.
Despite the enormous benefits of acknowledging uncertainty, it
is easy to
find advice that counsels otherwise. Business consultant
Rebecca Knight advised
that leadership in a pandemic requires you to “force yourself to
think positively.”7
It is worth parsing what that means because there are different
potential interpre-
tations. The dangerous interpretation is encouragement to lie to
ourselves and to
others about the chances of success.
When Elizabeth Holmes told Theranos investors she could
conduct hun-
dreds of blood tests using only a drop of blood, her confident
claims did not magi-
cally overcome the scientific and technological barriers to the
success of her
company’s technology. Her idealistically confident fervor
persisted even in the
face of setbacks. “You’ll get knocked down over and over and
over again, and you
get back up,” Holmes advised other young entrepreneurs.8 “I’ve
been knocked
down a lot, and it became really clear that this was what I

wanted to do, and I
would start this company over 10,000 times if I had to.”
Holmes’s confidence did not lead to success at Theranos. In
fact, her relent-
less optimism may even have undermined it. By silencing the
pessimists and pun-
ishing those who had the courage to criticize Theranos’s
products, Holmes made
it more difficult for the company to come clean and confess its
limitations.
Those whose lives depend on preparing for calamity are
particularly aware
of the benefits of pessimism. They obsess about all the ways in
which things can
go wrong and try to avoid becoming too overconfident about
risk. Consider those
who engage in risky activities like rock-climbing, skydiving, or
big-wave surfing.
Survival means understanding safety margins and not allowing
themselves to
become overconfident. In the words of big-wave surfer Brett
Lickle, “As soon as
you think, I’ve got this place wired. I’m the man! you’re about
thirty minutes away
from being pinned on the bottom for the beating of your life.”9
Those in high-reliability industries such as air travel or nuclear
power must
similarly anticipate potential failures, errors, and accidents. We
all owe a deep
debt of gratitude to the careful and cautious planners who
institute safeguards
that improve the safety of air travel. Their contemplation of
future accidents,

errors, and failures is precisely what keeps air travel so safe.
Even if your overconfidence does not lead directly to loss of
life, compla-
cency puts you at risk. Every successful company is vulnerable
of being overtaken
by fleeter rivals. Business history is littered with the carcasses
of wealthy, power-
ful companies that were overconfident of their continued
dominance. Just think
of Kodak and its failure to make the move to digital
photography, or of Blockbuster
Video, undone by online streaming video services. He was
thinking of these sorts
of risks when Andy Grove, former CEO of Intel, wrote, “Only
the paranoid
survive.”10
If blind optimism puts us at risk, the let us then consider a
second interpre-
tation of the admonition to think positively. That is the
encouragement to act by
reminding people of their options, even in the face of adversity.
Even in the dark-
est hour, it could be worse. There is still a path forward. Pull
yourself together. We
almost always have choices about how to act, how to invest, and
how to respond
to even the most difficult situations.
“We shall fight,” Winston Churchill told the British people in
the depths of

the Second World War. “We shall fight on the seas and oceans,
we shall fight with
growing confidence and growing strength in the air, we shall
defend our island,
whatever the cost may be.” Was Churchill lying to the British
people about the
perils ahead? No, Churchill was also forthright about the grim
challenges they
faced: “We have before us an ordeal of the most grievous kind.
We have before us
many, many long months of struggle and of suffering.”
Nevertheless, action is
preferable to despair.
Fake It till You Make It
A number of motivational speakers have advised would-be
leaders
to “fake it till you make it.”11 That is, imitate confidence,
competence, and an
optimistic mindset, so as to help realize those qualities. Stand
up and fight for
what you believe in, even when you are not sure you will be
victorious. Or, in
Shakespeare’s words, “Assume a virtue if you have it not.”
This is useful advice if motivating yourself to act is, itself, the
heart of the
achievement. If you would like to be more extraverted, friendly,
or generous,
then act that way. Actions can bring about the desired end state.
Even if it can feel
unnatural at the beginning, practice can increase your comfort
with a new behav-
ioral routine and even develop a new habit.12

The display of confidence can be a winning strategy, but only
if, in fact, you
have what it takes. Bill Gates tells the story of his youthful
excitement about one
of the world’s first commercial computers, the Altair.13 Gates
and Paul Allen, who
would go on to found Microsoft together, told Altair’s makers
that they had a pro-
gramming language that could run on the new machine. The
Altair people
expressed interest in seeing what the two young men had to
offer.
Gates and Allen got to work writing the program they imagined,
despite
the fact that they did not actually have an Altair on which to
test their code.
When Allen flew to Albuquerque two months later, the program
got its first test.
Their code actually ran. Allen recounted, “A wave of relief
surged over me. I
almost couldn’t believe it had worked the first time.”14 The
people at Altair were
impressed enough that they offered Gates and Allen jobs. In this
case, Gates’s
confidence was well placed because he was able to deliver.
Later in Microsoft’s history, the company’s record of delivering
on its
pledges was less consistent. The company’s overconfidence
frustrated customers,
competitors, and regulators. A Microsoft engineer coined the
term “vaporware” in

1982 to describe the company’s habit of announcing new
products that might
never actually arrive. Tesla’s leadership has made similarly
early announcements
of plans for new products, vehicles, and features. This practice
can discourage
competitors from developing rival products, and so the U.S.
Department of Justice
worries that it can violate antitrust law.15 When you cannot
actually deliver on
your confident promises, you reveal your overconfidence.
Tesla CEO Elon Musk got himself into trouble with another sort
of over-
confident announcement. On August 7, 2018, Musk posted on
Twitter, “Am con-
sidering taking Tesla private at $420. Funding secured.” The
tweet sent Tesla stock
into gyrations and led to charges from the Securities and
Exchange Commission
that he had committed securities fraud. Musk ultimately settled
with the SEC by
paying a $40 million fine and agreed to step down as the chair
of Tesla’s Board of
Directors.16
There are obviously other risks associating with “faking it” by
promising
more than one can deliver. Con men routinely behave as if they
are qualified,
capable experts in order to fool others. Frank Abagnale’s
supreme confidence
allowed him to get away with an astonishing series of con jobs.
However, when

Abagnale posed as a doctor, his confidence nearly proved fatal
for a child handed
to him for treatment.17 As a leader, you must have a realistic
sense of what you
can fake and what you cannot. Abagnale frequently posed as an
airline pilot, but
he had the wisdom to avoid attempting to fly a plane.
Here, it is worth highlighting the crucial distinction between
confidence
and overconfidence. Confidence can obviously contribute to
success, especially
when backed by actual ability, as the story of Gates and Allen
illustrates. But
when confidence outstrips reality, it crosses the line into
overconfidence. This is a
dangerous territory in which you are liable to undertake tasks,
enter competi-
tions, or announce products that will end in failure. You may be
sued by the U.S.
Justice Department or by unhappy investors. The challenge,
obviously, is to cali-
brate your assessments so that they are accurate. You want to be
as confident as
reality can justify, but not more. This challenge is particularly
acute when you
find yourself in a confidence arms race.
The Confidence Arms Race
A colleague of mine found himself in a conundrum when called
to testify
before the U.S. Congress on the subject of drug legalization.
This UC Berkeley
psychologist had studied drug abuse, drug enforcement, and the
potential conse-

quences of legalizing different classes of controlled substances.
His research sug-
gested that legalization of marijuana was unlikely to lead to
substantial increases
in the number of users, the number who became addicted to
other drugs, or the
number of fatalities due to overdoses. Being a good scientist, he
attempted to
present a balanced interpretation of his findings and admitted
their limitations.
Since marijuana was still illegal in the United States, he did not
yet have evi-
dence for what would happen if the nation legalized it. But his
research did have
evidence from other nations that had legalized marijuana, which
offered useful
evidence.
He was followed by heartfelt testimony from a mother who had
lost her
son to drugs. Sandra Bennett’s opinions were not informed so
much by evidence
as by anecdote, opinion, and dogma. She offered a simpler and
more confident
narrative: she railed against the idea that recreational drugs
might be legalized
and insisted that legalization would be a colossal mistake. There
was a profound
threat, she argued, to our children’s health. Legalization of
marijuana would con-
stitute an embrace of the drug culture, and was only the start of

a larger effort to
legalize all psychoactive and addictive drugs.
Speaking for the hundreds and thousands of parents who have
lost children to
drugs, I cannot understand how this country can listen for even
one moment
to those who advocate making illicit drugs easier to come by,
particularly when
most of the leaders of this effort are admitted drug users.
Unfortunately, credibil-
ity is given to those disingenuous scofflaws when they are
invited to the podium,
paraded on TV, glorified on PBS, and asked to serve as
consultants to government
agencies and the media, who then parrot this misleading,
deceitful and dangerous
propaganda.18
My colleague’s presentation was balanced and cautious,
presenting both
sides of the evidence. But it was Sandra Bennett’s passionate
arguments that won
the day, and Congress took no action on decriminalization.
Bennett was like the
one-armed economist that President Harry Truman reportedly
asked for. Truman
was tired of economic advisors who hedged their advice by
following up any rec-
ommendation with a cautionary, “. . . on the other hand.”
Truman, like most of
us, appreciated someone who offered clear, confident,
unambiguous advice.
Those who exude confidence, like Sandra Bennett, are naturally
more per-

suasive. In my research, my colleagues and I have found that
greater confidence
makes people more credible.19 Would-be leaders know that they
stand to benefit
from displaying confidence. Michael Lewis noted this dynamic
in his profile of
Barack Obama. Lewis wrote about the fact that the President
must make difficult
decisions with complex and uncertain outcomes. At the same
time, Lewis noted
the value in displaying confidence about those decisions: “After
you have made
your decision, you need to feign total certainty about it. People
being led do not
want to think probabilistically.”20 Leaders’ confidence inspires
faith in their abili-
ties and attracts followers.
Anticipating the Confidence Arms Race
Voters, investors, venture capitalists, and the rest of us
routinely rely
on confidence as a signal of potential performance. So long as
the correlation
between confidence and performance is positive, this might be
justifiable. But
my research also shows that confidence is not a reliable signal
of competence.21
Highly confident individuals are more likely to rise to positions
of status or
authority within groups, as one might expect, but they rise even

when their con-
fidence is not justified by their ability. In one study, we asked
groups of Berkeley
undergraduates to work together. Those who thought they were
better at the
task tended to talk first and talk more often, and other members
of the group
rated them as more influential.22 This makes perfect sense,
since the groups
sought capable leaders. They did not have good ways to assess
ability, but they
did have clear signals of confidence. The only problem was that
the most confi-
dent people in the group were not necessarily the most capable.
Too often, we rely on superficial displays of confidence rather
than real
experience, a proven track record, or a credible plan.
Entrepreneurs who under-
stand the persuasive power of confidence may try to bamboozle
with braggadocio.
And the more entrepreneurs escalate their displays of
confidence, the less useful
it becomes as an actual signal of future potential. It was
surprisingly difficult for
people in our experiment to tell who was really capable and who
just had a big
mouth. As a result, by elevating the most confident members,
groups tend to
select the more overconfident people.
Up until this point, I have highlighted the ways in which the
dangers of
overconfidence outweigh its benefits in decision-making. But
the calculus is more
complicated when it comes to questions of persuasion and

leadership. The setting
involves different incentives. When the goal is persuading
others, confidence pro-
vides what is called social proof, which can give other people
faith in one’s abilities
or one’s argument.
The candidate that is most persuasively confident is more likely
to win the
day, but overconfidence comes with risks. One way to think of
this dilemma is by
considering the analogy to reverse auctions. In a reverse
auction, sellers compete
with one another to offer better terms to a potential buyer. One
example is con-
tractors bidding on a building contract.
Contractors know that they can increase their chances of
winning the con-
tract by bidding low, thereby expressing confidence in their
ability to accomplish
the project more efficiently. Confident bidders do, in fact,
increase their chances
of winning. But being overconfident and under-bidding the
actual cost of con-
struction could make you a victim of the so-called winner’s
curse. Winning can be
a curse if your winning bid cannot cover your costs. Unless you
have good reason
to believe that your costs are actually lower than those of your
rivals, the fact that
you have priced your bid lower than theirs suggests you may
have bid too low.
You should expect to lose money if you have agreed to
complete the work for less
money than it will cost you to do so.

In formulating strategy, it is worth remembering that if you get
elected,
funded, or selected, then you are likely to be accountable to
deliver on your con-
fident claim. If exaggerated confidence helped you edge out
your rivals, then you
are at increased risk of disappointing those who have placed
their faith in you.
Even if you can reconcile yourself with the ethics of such
hypocrisy, you may
nevertheless worry about potential complaints, lawsuits, or
reputational damage.
The confident assurances offered by Elizabeth Holmes did not
assure the success
of her company or protect her from prosecution for fraud.
The Lure of Confidence
Those who must choose between contenders for leadership face
the other
side of this “reverse auction.” The confidence arms race
between contenders rep-
resents competing bids in an auction to earn buyers, followers,
investors, sup-
porters, or voters. Political candidates hope their confidence
will persuade us
to vote for them. Job applicants hope that their confidence will
earn them the
job and help them negotiate better salaries. Entrepreneurs hope
that confident

pitches will bring them investments from venture capitalists.
Contractors hope
that their confidently optimistic bids will earn them business.
When choosing which projects to support, whom to believe, or
what to
invest in, we should choose the person who is most capable and
who speaks the
truth. We should seek revealing tests of others’ claims. For
instance, before select-
ing a contractor to renovate the house or to develop a new
software system, we
should examine their track record of performance. How often
did they deliver on
prior projects and contracts?
Many aspiring leaders may seek to display confidence that
eludes
falsification.23 They may promise phenomenal success without
committing to a
specific sales figure. They talk a big game without offering
specifics or guarantees.
Knowing this, wise investors and buyers will demand leaders
who are clearer and
more explicit in their claims, assurances, and promises. By
seeking clarity, we can
help raise the standards of what we expect from our leaders and
reward honesty
and well-calibrated confidence.
If you want to avoid being taken in by a confidence man,24
remember the
perils of the winner’s curse. When we choose the more
confident contender, we
may be rewarding escalation in the confidence arms race and
putting ourselves at

risk of selecting the most overconfident who is most likely to
disappoint us. How
can you avoid falling victim to the winner’s curse? Resist
persuasion by “cheap
talk” forms of confidence such as assertive body language and
vague optimistic
claims. Instead, seek out specific claims and testable
guarantees.
Bridgewater Associates, by some measures the world’s most
successful
hedge fund, seeks to document every employee’s credibility
with a tracking
system that awards them “dots” for making wise and well-
calibrated forecasts
that turn out to be right. This system is key to the company’s
goal of being an
“idea meritocracy” in which the best ideas rise to the top,
regardless of who
proposes them.25
Anyone who has hired a contractor for a construction or
remodeling job
has seen the dysfunctional dynamics of the confidence arms
race at work. By
selecting the bidder who promises to complete the work fastest
and for the lowest
price, you risk rewarding the overconfident. When my family
collected bids to
remodel the kitchen in our home, prices varied dramatically.
The lowest bid came

from a contractor who did not have enough of a record of
accomplishment to give
us faith in them. Instead, we preferred the contractor who had
impressed us with
their experience and long list of satisfied customers. When I
asked how long our
remodeling job would take, the contractor claimed they could
completely remodel
the kitchen in three weeks. Knowing how common it is for
remodeling projects
to go past deadline, I was wary their claim.
So I offered what negotiators call a contingent contract.26 I
wrote their
three-week forecast into the contract, along with a promise that,
if they com-
pleted the work to my satisfaction in three weeks, I would pay a
bonus. One of the
benefits of contingent contracts is that they can create
incentives for performance.
The result was that the contractor completed the kitchen
remodel ahead of sched-
ule and I happily paid the bonus.
A contingent contract like this can offer confident contenders
the chance to
bet on their claims. If they believe what they say, they should
be eager to take the
bet. In employment contracts, performance-based bonuses can
serve this func-
tion. Sometimes, for instance, entrepreneur s ask for generous
funding, justified
by confident claims of future performance. Investors can
counter with contingent
contracts whose value depends on that performance. There are
many opportuni-

ties to structure incentives to reward good confidence
calibration.
A Way Forward
Wise leaders have a way out of the dilemma between expressing
confi-
dence and telling the truth. Evidence suggests leaders can
honestly confess the
uncertainties inherent in the future without undermining their
own credibility.27
The way to do this is to report the uncertainties with
confidence. That is not a
contradiction.
“I’m confident there is a 60% chance we will win the game”
expresses
assurance that a full analysis of all the relevant evidence
suggests a 60% probabil-
ity, but also that uncertainty remains.28 If you are worried
about confessing uncer-
tainty, imagine how much more you jeopardize your credibility
by feigning
certainty. You can acknowledge that there are many ways to
fail, even as you
pursue the actions most likely to achieve success. Jeff Bezos
cautioned early inves-
tors in Amazon that there was a 70% chance they would lose
their investment.29
Gather the best evidence you can, assess the expected values of
different
courses of action, and place your bets accordingly. Do not
delude yourself about
your chances of success. In 2016, Bezos said the following:

Outsized returns often come from betting against conventional
wisdom, and con-
ventional wisdom is usually right. Given a 10% chance of a 100
times payoff, you
should take that bet every time. But you’re still going to be
wrong nine times out
of 10.30
That is why Bezos boasts that Amazon is “the best place in the
world to
fail.”31 Investing in Amazon itself has turned out to be a good
bet, despite the high
risk of failure, because of its substantial up side. You can be
confident that you
have made the choice with the highest expected value, even
while you accept the
risk of failure.
The trust placed in you as a leader gives you a special kind of
responsibility
to provide just the right amount of confidence. There is a path
forward through
tough times. In this pandemic depression, that path will be long
and painful. But
we have choices to make, and honestly confronting them will
help you and those
who depend on you to choose the best course.
Author Biography
Don A. Moore holds the Lorraine Tyson Mitchell Chair in
Leadership at the Haas

School of Business at the University of California at Berkeley
(email: [email protected]
haas.berkeley.edu). He is the author, most recently, of Perfectly
Confident: How to
calibrate your decisions wisely (2020, Harper Collins).
Notes
1. Emily Goodin and Geoff Earle, “Trump ADMITS He
Downplayed Coronavirus after
Bombshell Woodward Tapes,” Mail Online, September 9, 2020,
https://www.dailymail.co.uk/
news/article-8715673/Trump-ADMITS-downplayed-
coronavirus-bombshell-Woodward-
tapes-reveal-KNEW-deadly.html.
2. Robert Iger, The Ride of a Lifetime: Lessons Learned fr om
15 Years as CEO of the Walt Disney
Company (New York, NY: Random House, 2019).
3. Dave Mosher, “Elon Musk Says SpaceX Is on Track to
Launch People to Mars within 6
Years—Here’s the Full Timeline of His Plans to Populate the
Red Planet,” Business Insider,
November 2, 2018, https://www.businessinsider.com/elon-musk-
spacex-mars-plan-time
line-2018-10.
4. Harold M. Zullow and Martin E. P. Seligman, “Pessimistic
Rumination Predicts Defeat of
Presidential Candidates, 1900 to 1984,” Psychological Inqui ry,
1/1 (1990): 52-61.
5. Elizabeth R. Tenney, Jennifer M. Logg, and Don A. Moore,
“(Too) Optimistic about
Optimism: The Belief That Optimism Improves Performance,”

Journal of Personality and Social
Psychology, 108/3 (2015): 377-399, doi:10.1037/pspa0000018.
6. Cameron Anderson, Sebastien Brion, Don A. Moore, and
Jessica Kennedy, “A Status-
Enhancement Account of Overconfidence,” Journal of
Personality and Social Psychology, 103/4
(2012): 718-735, doi:10.1037/a0029395.
7. Rebecca Knight, “How to Handle the Pressure of Being a
Manager Right Now,”
Harvard Business Review, April 30, 2020,
https://hbr.org/2020/04/how-to-handle-the-
pressure-of-being-a-manager-right-now.
8. Chris O’Brien, “10 Inspirational Quotes from Theranos
Founder Elizabeth Holmes
That She Probably Needs Right Now,” VentureBeat, April 11,
2018, https://venturebeat.
com/2018/04/11/10-inspirational-quotes-from-theranos-founder-
elizabeth-holmes-that-
she-probably-needs-right-now/.
9. Susan Casey, The Wave (New York, NY: Doubleday, 2010).
10. Andrew S. Grove, Only the Paranoid Survive: How to
Exploit the Crisis Points That Challenge Every
Company (New York, NY: Crown Publishing Group, 2010).
11. Amy Cuddy, “TED Talk: Fake It till You Make It,” 2016,
https://www.ted.com/talks/
amy_cuddy_your_body_language_may_shape_who_you_are.
12. Charles Duhigg, The Power of Habit: Why We Do What We
Do in Life and Business (Toronto, ON,
Canada: Doubleday Canada, 2012).

13. Davis Guggenheim, “Inside Bill’s Brain: Decoding Bill
Gates,” Netflix, 2019, https://www.
netflix.com/title/80184771.
mailto:[email protected]
mailto:[email protected]
https://www.dailymail.co.uk/news/article-8715673/Trump-
ADMITS-downplayed-coronavirus-bombshell-Woodward-tapes-
reveal-KNEW-deadly.html
https://www.businessinsider.com/elon-musk-spacex-mars-plan-
timeline-2018-10
https://www.businessinsider.com/elon-musk-spacex-mars-plan-
timeline-2018-10
https://hbr.org/2020/04/how-to-handle-the-pressure-of-being-a-
manager-right-now
https://hbr.org/2020/04/how-to-handle-the-pressure-of-being-a-
manager-right-now
https://venturebeat.com/2018/04/11/10-inspirational-quotes-
from-theranos-founder-elizabeth-holmes-that-she-probably-
needs-right-now/
needs-right-now/
needs-right-now/
https://www.ted.com/talks/amy_cuddy_your_body_language_ma
y_shape_who_you_are
https://www.ted.com/talks/amy_cuddy_your_body_language_ma

y_shape_who_you_are
https://www.netflix.com/title/80184771
https://www.netflix.com/title/80184771
14. Ruth Umoh, “Why Bill Gates Says You Need Confidence at
a Young Age to Achieve Success,”
CNBC, October 24, 2017,
https://www.cnbc.com/2017/10/24/why-bill-gates-says-you-
need-
confidence-to-achieve-success.html.
15. “Memorandum of the United States of America in Response
to the Court’s Inquiries
Concerning ‘Vaporware’ : U.S. v. Microsoft Corporation,”
August 14, 2015, https://www.
justice.gov/atr/memorandum-united-states-america-response-
courts-inquiries-concerning-
vaporware-us-v-microsoft.
16. “Elon Musk Settles SEC Fraud Charges; Tesla Charged with
and Resolves Securities Law
Charge,” 2018, https://www.sec.gov/news/press-release/2018-
226.
17. Frank W. Abagnale and Stan Redding, Catch Me If You
Can: The True Story of a Real Fake (New
York, NY: Crown, 2002).
18. “The Decriminalization of Illegal Drugs,” House
Subcommittee on Criminal Justice, Drug
Policy, and Human Resources, July 13, 1999,
https://www.govinfo.gov/content/pkg/CHRG-
106hhrg64343/html/CHRG-106hhrg64343.htm.

19. Anderson et al., op. cit.
20. Michael Lewis, “Obama’s Way,” Vanity Fair, September 11,
2012, http://www.vanityfair.com/
politics/2012/10/michael-lewis-profile-barack-obama.
21. Jessica A. Kennedy, Cameron Anderson, and Don A. Moore,
“When Overconfidence
Is Revealed to Others: Testing the Status-Enhancement Theory
of Overconfidence,”
Organizational Behavior and Human Decision Processes, 122/2
(November 2013): 266-279.
22. Ibid.
23. Todd Rogers and Michael I. Norton, “The Artful Dodger:
Answering the Wrong Question the
Right Way,” Journal of Experimental Psychology: Applied, 17/2
(June 2011): 139.
24. Maria Konnikova, The Confidence Game: Why We Fall for
It . . . Every Time (New York, NY:
Penguin, 2016).
25. Ray Dalio, Principles: Life and Work (New York, NY:
Simon & Schuster, 2017).
26. Deepak Malhotra and Max H. Bazerman, Negotiation
Genius: How to Overcome Obstacles and
Achieve Brilliant Results at the Bargaining Table and Beyond
(New York, NY: Bantam, 2007).
27. Celia Gaertig and Joseph P. Simmons, “Do People
Inherently Dislike Uncertain Advice?”
Psychological Science, 29/4 (April 2018): 504-520.
28. Ibid.

29. Joshua Quittner, “Person of the Year 1999: Jeff Bezos,”
Time Asia, December 1999, http://edi-
tion.cnn.com/ASIANOW/time/magazine/99/1227/cover3.html.
30. Eugene Kim, “Jeff Bezos: ‘We Are the Best Place in the
World to Fail,’” Business Insider, April 5,
2016, https://www.businessinsider.com/amazon-ceo-jeff-bezos-
best-place-in-the-world-to-
fail-2016-4.
31. Ibid.
need-confidence-to-achieve-success.html
need-confidence-to-achieve-success.html
https://www.justice.gov/atr/memorandum-united-states-america-
response-courts-inquiries-concerning-vaporware-us-v-microsoft
https://www.sec.gov/news/press-release/2018-226
106hhrg64343/html/CHRG-106hhrg64343.htm
106hhrg64343/html/CHRG-106hhrg64343.htm
http://www.vanityfair.com/politics/2012/10/michael-lewis-
profile-barack-obama
http://www.vanityfair.com/politics/2012/10/michael-lewis-
profile-barack-obama
http://edition.cnn.com/ASIANOW/time/magazine/99/1227/cover
3.html
http://edition.cnn.com/ASIANOW/time/magazine/99/1227/cover
3.html

https://www.businessinsider.com/amazon-ceo-jeff-bezos-best-
place-in-the-world-to-fail-2016-4
https://www.businessinsider.com/amazon-ceo-jeff-bezos-best-
place-in-the-world-to-fail-2016-4
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