The Trouble with Overconfidence This paper reconciles three distinct ways the research literature has defined overconfidence: (1) overestimation of one’s actual performance, (2) overplacement of one’s performance relative to others, and (3) excessive precision in one’s beliefs. Experimental evidence shows that reversals of the first two (apparent underconfidence) tend to occur on different types of tasks. On difficult tasks, people overestimate their actual performances but also mistakenly believe they are worse than others; on easy tasks, people underestimate their actual performances but mistakenly believe they are better than others. The paper offers a straightforward theory explaining these inconsistencies. Overprecision is more persistent than the other two types of overconfidence, but its presence reduces the magnitude of both overestimation and overplacement. Overconfidence can have serious consequences, explaining phenomena like wars, strikes, and stock market bubbles. It has been studied inconsistently, and this paper examines the three different ways overconfidence has been studied and attempts to reconcile contradictory results. The three faces of overconfidence are: overestimation (overestimating one’s actual ability), overplacement (believing one is better than others), and overprecision (excessive certainty in beliefs). Overprecision is more persistent than the other two types of overconfidence, but its presence reduces the magnitude of both overestimation and overplacement. The paper presents a theory that explains these inconsistencies. It suggests that people often have imperfect information about their own performances, abilities, or chance of success. As a result, people’s estimates of themselves are regressive, and their estimates of others are even more regressive. Consequently, when performance is high, people will underestimate their own performances, underestimate others even more so, and thus believe they are better than others. When performance is low, people will overestimate themselves, overestimate others even more so, and thus believe they are worse than others. The paper also discusses the confounding of overestimation and overprecision, underconfidence, and the inconsistency between overestimation and overplacement. It presents an illustrative experiment that measures all three varieties of overconfidence concurrently and allows testing of the theory’s predictions. The paper concludes that overconfidence research has been inconsistent, and the theory presented provides a framework for understanding the different types of overconfidence and their relationships. The theory is based on Bayesian reasoning and suggests that people’s beliefs are influenced by their prior expectations and the information they receive. The paper also discusses the implications of the theory for understanding overconfidence in various contexts.The Trouble with Overconfidence This paper reconciles three distinct ways the research literature has defined overconfidence: (1) overestimation of one’s actual performance, (2) overplacement of one’s performance relative to others, and (3) excessive precision in one’s beliefs. Experimental evidence shows that reversals of the first two (apparent underconfidence) tend to occur on different types of tasks. On difficult tasks, people overestimate their actual performances but also mistakenly believe they are worse than others; on easy tasks, people underestimate their actual performances but mistakenly believe they are better than others. The paper offers a straightforward theory explaining these inconsistencies. Overprecision is more persistent than the other two types of overconfidence, but its presence reduces the magnitude of both overestimation and overplacement. Overconfidence can have serious consequences, explaining phenomena like wars, strikes, and stock market bubbles. It has been studied inconsistently, and this paper examines the three different ways overconfidence has been studied and attempts to reconcile contradictory results. The three faces of overconfidence are: overestimation (overestimating one’s actual ability), overplacement (believing one is better than others), and overprecision (excessive certainty in beliefs). Overprecision is more persistent than the other two types of overconfidence, but its presence reduces the magnitude of both overestimation and overplacement. The paper presents a theory that explains these inconsistencies. It suggests that people often have imperfect information about their own performances, abilities, or chance of success. As a result, people’s estimates of themselves are regressive, and their estimates of others are even more regressive. Consequently, when performance is high, people will underestimate their own performances, underestimate others even more so, and thus believe they are better than others. When performance is low, people will overestimate themselves, overestimate others even more so, and thus believe they are worse than others. The paper also discusses the confounding of overestimation and overprecision, underconfidence, and the inconsistency between overestimation and overplacement. It presents an illustrative experiment that measures all three varieties of overconfidence concurrently and allows testing of the theory’s predictions. The paper concludes that overconfidence research has been inconsistent, and the theory presented provides a framework for understanding the different types of overconfidence and their relationships. The theory is based on Bayesian reasoning and suggests that people’s beliefs are influenced by their prior expectations and the information they receive. The paper also discusses the implications of the theory for understanding overconfidence in various contexts.