Overconfidence in estimation: Testing the anchoring-and-adjustment hypothesis

People are frequently overconfident in the accuracy of their estimates of uncertain quantities. The present study requested 50%- or 90%-confidence ranges. Overconfidence is shown when less than the target percentage of ranges include the true value. Tversky and Kahneman (1974) proposed that people use an anchoring-and-adjustment heuristic: They begin with a starting value, one supplied to them or generated by them, and insufficiently adjust their estimates around this anchor. The present data support the proposed anchoring process. If subjects receive another person's point estimates, their own implicit point estimates are correlated with these values. However, anchoring- and-adjustment processes do not invariably produce overconfidence. Subjects who receive anchors are no more overconfident than are those who do not receive anchors. If subjects are required to produce a point estimate first, overconfidence decreases; processes involved in explicitly displaying the point estimate are implicated. Overconfidence may occur because people do not realistically assess their estimation ability.