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Epictetus comments on Self-confidence and status - Less Wrong Discussion
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Confidence is based on your perception of yourself. When someone tells you to be more confident, it's probably because they believe your perception of yourself is worse than reality. Excessively low confidence is no less of a delusion than excessively high confidence.
I would add that it could be more generally a mismatch between your perceptions and another person's perceptions.
I've had people tell me to be more self-confident when I was already feeling confident. After some time I figured out what they actually meant was "Speak up more in meetings" and "When you accept a task, don't mention various things that could interfere with you completing it. Say "I can do it" and leave it at that, even if you have an appreciation for life's uncertainties."
The cynical alternative hypothesis is that "be more confident" actually means "be higher status".