Power and Overconfidence

A large body of research suggests that many high-stakes decisions made by powerful organizational actors are plagued by overconfidence (Hayward & Hanbrick, 1997; Zajac & Bazerman, 1991). Extant research on power has demonstrated that the sense of power has wide-ranging psychological consequences (Keltner, Gruenfeld, Anderson, 2003). We suggest that it is a sense of power itself that leads to overconfidence. Three studies, using different instantiations of the sense of power, and different measures of overconfidence, demonstrate that power infects decisions with overconfidence (Study 1, Study 2 and Study 3) and the decisions borne out of this overconfidence have downstream consequences in negotiations (Study 4)