This definition was taken from Wikipedia. I had a hard time figuring this out as I listened to the Denis Waitley CD that I received from Success university, so I researched and thought I would share some of what I have found.

Self-efficacy is the belief that one is capable of performing in a certain manner or attaining certain goals. It is a belief that one has the capabilities to execute the courses of actions required to manage prospective situations. Unlike efficacy, which is the power to produce an effect (in essence, competence), self-efficacy is the belief (whether or not accurate) that one has the power to produce that effect. For example, a person with high self efficacy may engage in a more health related activity when an illness occurs, whereas a person with low self efficacy would harbor feelings of hopelessness.

It is important here to understand the distinction between self-esteem and self-efficacy. Self-esteem relates to a person's sense of self-worth, whereas self-efficacy relates to a person’s perception of their ability to reach a goal. For example, say a person is a terrible rock climber, they would likely have a poor self-efficacy in regard to rock climbing, but this wouldn't need to affect their self-esteem; most people don’t invest much of their self-esteem in this activity. Conversely, one might have enormous skill at rock climbing, yet set such a high standard for himself that his self-esteem is low.

The concept of self-efficacy is the focal point of Albert Bandura's social cognitive theory. By means of the self-system, individuals exercise control over their thoughts, feelings and actions. Among the beliefs with which an individual evaluates the control over his/her actions and environment, self-efficacy beliefs are the most influential arbiter of human activity. Self-efficacy – the belief in one's capabilities to organize and execute the courses of action required to produce given attainments – is constructed on the basis of the four most influential sources: enactive attainment, vicarious experience, verbal persuasion and physiological as well as emotional factors. Self-efficacy plays the central role in the cognitive regulation of motivation, because people regulate the level and the distribution of effort they will expend in accordance with the effects they are expecting from their actions.

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