Decision-making is often hierarchical and approximate in nature: decisions are not being made based on actual observations, but on intermediate variables that themselves have to be inferred. Recently, we showed that during sequential perceptual decision-making, those conditions induce characteristic temporal biases that depend on the balance of sensory and category information present in the stimulus. Here, we show that the same model makes predictions for when observers will be over-confident and when they will be under-confident with respect to a Bayesian observer. We tested these predictions by collecting new data in a dual-report decision-making task. We found that for most participants the bias in confidence judgments changed in the predicted direction for stimulus changes that led them from over-weighting early evidence to equal weighting of evidence or over-weighting of late evidence. Our results suggest that approximate hierarchical inference might provide the computational basis for biases beyond low-level perceptual decision-making, including those affecting higher level cognitive functions like confidence judgements.