This research speaks to the ongoing debate regarding the role of self-efficacy in self-regulation. Specifically, we argue that both positive and negative relationships between self-efficacy and resource allocation are part of an adaptive process. We present the results of two empirical studies demonstrating that a negative relationship between self-efficacy and resource allocation is not always maladaptive and, in fact, can lead to positive indirect effects on performance. In Study 1, we observed natural fluctuations in self-efficacy as individuals completed a mathematics test, finding that the tendency to reduce resource allocation with high self-efficacy is most clearly observed when time is scarce. In turn, an inverted-U relationship between resource allocation and overall performance under high time scarcity emerged such that moderate levels of resource allocation resulted in the highest levels of performance. Study 2 used an experimental design in which self-efficacy was manipulated. Replicating core findings from Study 1, individuals drew upon self-efficacy to balance resource allocation across competing demands. We conclude with a discussion of the theoretical and practical implications of our results.