Freud, finance and folly
Mr Kahneman's work points to three types of over-confidence. First, people tend to exaggerate their own skill and prowess; in polls, far fewer than half the respondents admit to having below-average skills in, say, love-making or driving. Second, they overestimate the amount of control they have over the future, forgetting about luck and chalking up success solely to skill. And third, in competitive pursuits such as betting on shares, they forget that they have to judge their skills against those of the competition.