Do Know-It-Alls Really Know It All?

“Pre-rated stocks,” “fixed rate deduction,” and “annualized credit” sound like fairly weighty financial terms. So much so, that a number of self-described finance experts said they were familiar with them. However, these concepts were invented by researchers at Cornell University seeking to understand why people say they know things when they don’t—what the team refers to as “overclaiming.” The resulting study, published in the journal Psychological Science, indicates that the more people see themselves as experts, the more likely they are to feign knowledge of phony information. Stav Atir and David Dunning, both authors on the paper, explain why know-it-alls overestimate what they actually know. They also help analyze the results of a Science Friday quiz that sought to informally apply their findings (see the quiz question below.)