ABSTRACT
The hubris risk factor in this chapter is self-deception. The chapter begins with a discussion of the better than average effect (BTAE) and how this, and the related Dunning-Kruger effect (DKE), can lead to miscalibrations and over-confidence giving rise to self-enhancement self-aggrandisement, and hubristic incompetence. The idea of ‘meta-ignorance’ (ignorance of one’s own ignorance) is introduced. The relationship between Richard Roll’s foundational ‘hubris hypothesis’ and CEO over-confidence in mergers and acquisitions is discussed. Examples from business and politics are used to illustrate the negative effects of self-deception and over-confidence leading to hubris. The strategies of self-deception and obfuscation and their effects on over-confidence and over-claiming are explored. The chapter concludes with a discussion of how exposure to over-confidence and self-deception can be avoided and what the early warning signs of over-confidence and self-deception are.
