Lichtenstein, Fischhoff & Phillips 1977 — the hard-easy effect

Claim: Lichtenstein, Fischhoff & Phillips (1977; reviewed 1982) established the hard-easy effect — overconfidence INCREASES as task difficulty increases. People are overconfident on hard items and can be UNDERconfident on easy ones.

Source: Lichtenstein, Fischhoff & Phillips 1977 (reviewed 1982). Foundational calibration literature.

Confidence: Verified.

Why this matters for Candid: Aligns with the Moore & Healy 2008 taxonomy (Moore & Healy 2008 — the three forms of overconfidence (estimate / place / precision)) — on EASY markets the entrepreneur OVERPLACES (vs others); on HARD ones they are OVERCONFIDENT in absolute terms. Both patterns predict that owner self-ratings will be systematically biased — in opposite directions depending on perceived market difficulty.