The Overconfidence Effect is a cognitive bias where individuals overestimate their knowledge, abilities, or predictions. This phenomenon can lead people to take greater risks or make poor decisions because they believe they are more capable than they actually are. For example, a person might think they can complete a complex task without sufficient preparation, leading to potential failure. This effect is commonly observed in various fields, including finance, sports, and even everyday life. Research shows that overconfident individuals often ignore evidence that contradicts their beliefs, which can result in significant errors in judgment. Understanding this bias can help improve decision-making processes.