Are You an Irrational Optimist?

Recognizing Optimism Bias:

Would you believe that the average person expects to live a better-than-average life? The math doesn't add up, but this skewed perception is quite common.

This gap between perception and reality is due to a cognitive bias called optimism bias.

What Is the Optimism Bias?

Optimism bias, also known as positivity bias, is the tendency for people to overestimate their probability of experiencing positive events and underestimate the likelihood of experiencing adverse events.

For instance, a person may believe they have an outsized chance to live longer, be wildly successful in their career, or win the lottery due to optimism bias.

Optimism bias leads us to believe we are less likely to encounter hardship and more likely to find success relative to our peers.

Unfortunately, this irrational tendency creates an intersection between hope and overconfidence.

The illusion that things will always go smoothly can also cause you to significantly underestimate how long it will take you to get things done. The Nobel Prize-winning author of Thinking, Fast and Slow, Daniel Kahneman, calls this problem the planning fallacy.

Similarly, underestimating the probabilities of adverse outcomes can lead to poor decisions in preparing for those outcomes.

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