Malcolm Gladwell is my favorite author and on May 5th, he spoke at the New Yorker Summit about how overconfidence led to the current economic crisis. Wall streeters will criticize that Gladwell is not an economist and doesn't understand the complex issues that led to the collapse, and they are right on one of those counts.  He is not an economist.  He is, however, one of the most brilliant sociologists on the planet with a unique ability to understand and articulate how and why things happen in today's society.

Gladwell acknowledges, and then dismisses, what most experts attribute as the cause of the financial collapse - institutional (regulatory) failure and incompetence of the experts on Wall Street.  He instead offers a third option - overconfidence.  Overconfidence brought on by what biological sociologists call miscalibration and illusion of control.

He does a better job of explaining miscalibration and illusion of control than I could so, please, watch the video.