In my last post I suggested that overconfidence might spread between CEOs, since CEOs tend to
socialize with each other. My conclusion was a resounding "maybe." Here I offer a more general argument based on the
friendship paradox (explained at
Wikipedia and at
Rankmaniac 2012) for why social interaction may tend to build overconfidence.
As a reminder, in case you missed some of my earlier posts (shame!), the friendship paradox is the mathematical finding from the theory of networks that, loosely phrased, your friends on average have more friends than you do. The reason for this is that the people we are linked to in the social network are different from random members of the population—they tend to be people with lots of links!
Now, consider an individual's decision about whether to make a social connection, such as asking an acquaintance out on a date, or inviting a work colleague over for dinner. If rejection is painful, or if there is some up-front psychic or planning cost of issuing an invitation, then you will be more likely to issue the invitation if you think you are socially attractive to others, so that the response will be favorable. In other words, socially confident individuals will have higher expected profits than non-confident individuals from trying to form new links. So socially confident (perhaps overconfident) people will tend to end up with lots of links.
By the friendship paradox our friends are people with lots of links, so this implies that we tend to be disproportionately linked to highly confident people. If we tend to emulate those around us, we may therefore tend to become more confident ourselves. Maybe—but as suggested in my previous post, it depends whether interacting with someone who is highly confident causes us to emulate, or to be intimidated.
It is easy to picture either case, depending on what we mean by a socially confident person. Consider someone with a sunny disposition who feels sure that those around him are benevolent. That doesn't sound very intimidating. On the other hand, someone who thinks that he is socially attractive because he thinks he's smarter or hotter than everyone else might be intimidating—or annoying. We may not emulate these types of acquaintances. So overall, do you think that social confidence is contagious?