![]() Individuals, analysts, and government officials were all too optimistic that the economy would grow (i.e., that businesses would continue to be profitable, that there would be more jobs for people, and that incomes would increase), leading them to ignore any warning signs. Example: Optimism bias and the economySeveral experts consider optimism bias to be one of the core causes of the financial crisis of 2007-2008. Optimism bias can also influence collective behaviour and produce large-scale effects. Sometimes, expecting positive things can become a self-fulfilling prophecy. When we are optimistic, we are more motivated to try harder, which in turn can influence the outcome. On the other hand, optimism is also linked to achievement in several domains, such as sports, business, and education. It can even cause us to adopt harmful habits, such as smoking. Failure to assess potential hazards can also mean failing to take out sufficient insurance or to get regular medical check-ups. In project management, for instance, optimism bias can cause us to underestimate the budget and time needed, a common error called the planning fallacy. Optimism bias can be a problem when it prevents us from accurately anticipating risk. Why does optimism bias matter?īecause a majority of people are susceptible to optimism bias, it’s important to be aware of its influence on our perception and judgment. ![]() Because of this, it can often lead to better results than unbiased or rational beliefs. Overall, optimism bias enables us to cope with our environment and worry less about uncertainty. Optimistic patients are more likely to believe that they will recover, leading them to adopt behaviours that increase their chances (e.g., exercise, healthy diet). Expecting positive outcomes reduces stress and anxiety.
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