Knowledge Calibration: What Consumers Know and What They Think They Know

Consumer knowledge is seldom complete or errorless. Therefore, the self-assessed validity of knowledge and consequent knowledge calibration (i.e., the correspondence between self-assessed and actual validity) is an important issue for the study of consumer decision making. In this article we describe methods and models used in calibration research. We then review a wide variety of empirical results indicating that high levels of calibration are achieved rarely, moderate levels that include some degree of systematic bias are the norm, and confidence and accuracy are sometimes completely uncorrelated. Finally, we examine the explanations of miscalibration and offer suggestions for future research. Consumers are overconfident—they think they know more than they actually do. Our simple goal is to evaluate this proposition. Ultimately, we conclude that overconfidence is indeed a robust phenomenon and can be adopted by researchers as a stylized fact about human cognition; however, there are critical qualifications and