This particular phenomenon is due to a cognitive bias first illustrated by Dunning and Kruger in 2009, and therefore referred to as the Dunning-Kruger Effect.
Their `1999 paper starts with a story illustrating how the incompetent often lack the skill necessary to recognize their own incompetence:
In 1995, McArthur Wheeler walked into two Pittsburgh banks and robbed them in broad daylight, with no visible attempt at disguise. He was arrested later that night, less than an hour after videotapes of him taken .from surveil- lance cameras were broadcast on the 11 o'clock news. When police later showed him the surveillance tapes, Mr. Wheeler stared in incredulity. “But I wore the juice,” he mumbled. Apparently, Mr. Wheeler was under the im- pression that rubbing one's face with lemon juice rendered it invisible to videotape cameras (Fuocco, 1996).
Apparently Wheeler had hear that Lemon Juice was used for invisible ink and thought it would therefore work to make his face invisible.
A couple of other cognitive biases partner together to make this worse. Attributions bias causes people to attribute bad outcomes to bad luck and good outcomes to skill. So if your business venture fails, it was because you were merely unlucky, had bad timing, etc. But if you win the lottery, it was because you had a superior system borne of a keene intellect.
The lake Woebegone Effect is named after Garrison Keillor's fictional town where "all the children are above average." If you ask a group of 100 people to rate themselves on a skill such as driving, 8-% of them will rate themselves above average. By definition no more than 50% can be above average, so 30% of these people are deluding themselves about their skill.
So in a group of people working together, the chances are good that there will be someone incompetent who believes that they are well above average, that they always make good decisions, and they will not have the self awareness or metacognition to be able to identify their own shortcomings. And here is the kicker: they will be far more confident about there own ideas and probably more vocal.
Why? because they feel smarter than everyone else and completely lack the ability to see the flaws in their own ideas!
I don't pretend to have a cure for this. But I have often wondered at why the truly talented people in an organization are often the quietest and most riddled with doubt. This explains it.
What it does suggest is that for those of us in senior management, we really must find ways to hear what the quiet people think. Allowing vociferous, confident people to dominate the conversations has a good chance of producing truly flawed plans. Confidence, it seems is not an indication of competence, but rather often, evidence of the opposite.