![]() Our overoptimism aggregates into exponentially devastating results. But as a general rule of thumb, it is important to be aware of how our optimism blinds us to negative outcomes and results in making poor decisions. Plus, it can be too hard to take a step forward if we become too preoccupied with our potential downfall. Sometimes we need to believe in our own abilities, even if no one else does. This way, we can persevere even in the face of hardship or rejection. Of course, it is necessary to have some optimism. 2 On top of this, assuming we will be successful stops us from taking preventative measures, like buying insurance or using contraceptives. The optimism bias can also encourage risky behaviors like smoking by causing us to ignore the potential of unwanted outcomes. We assume that we will make more money than others. We assume that our relationships will last longer than they realistically might. 1 However, as in Tom’s case, there can be high costs to overestimating our success in our personal and professional lives.įor example, we assume that we can complete projects in shorter amounts of time than is actually possible. Research consistently supports that the overwhelming majority of us exhibit a bias toward optimism. But at the end of the day, his likelihood of failing is statistically the same as everyone else's, resulting in his inevitable failure. However, Tom confidently believes he can outperform the rest because of his abilities as an entrepreneur. In this scenario, Tom exhibits the optimism bias because he refuses to take into consideration the past six businesses that failed before him as well as the environmental factors working against him. However, Tom’s restaurant fails to sustain enough business and is unfortunately forced to shut down-just like the rest before him. Tom still feels he can overcome these obstacles with his expertise. His friend warns him that the street layout and surrounding competition make it difficult to draw pedestrians into the area. Tom pours his time and money into the venture, refusing to yield to shortcomings or accept failure as an option. After all, he graduated at the top of his class, is overflowing with big ideas, and is in touch with the pulse of young city-goers. However, Tom feels as though he has what it takes to make his restaurant a success. Each venture fell short of earning the necessary returns to stay afloat and was forced to close. Previously, six businesses failed in the same building he purchased. ![]() Consider the following scenario: Tom is a bright and motivated entrepreneur who is in the midst of starting his own restaurant.
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