Final answer:
The effect that occurs when people who are incompetent at something fail to recognize their own incompetence is the Dunning-Kruger effect. The correct answer is option 2.
Step-by-step explanation:
The phenomenon in which people who are incompetent at something are unable to recognize their own incompetence is known as the Dunning-Kruger effect. Developed by social psychologists David Dunning and Justin Kruger, this cognitive bias demonstrates how individuals with limited knowledge or competence in a particular domain often overestimate their own abilities, while experts tend to underestimate theirs. The Dunning-Kruger effect can lead to overconfidence in novices who do not have the skills or knowledge base to accurately assess their level of competence. This is contrasted with experts, who accurately rate their knowledge but may assume others have a similar understanding.
Understanding the Dunning-Kruger effect illustrates the importance of epistemic humility, acknowledging the limitations of one's own knowledge and expertise, especially in new and unfamiliar areas. Recognizing this psychological bias can help prevent the potentially harmful consequences of overconfidence, such as taking ill-advised risks or making poor decisions.