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Why do we overestimate the probability of success?

Written by: The Decision Lab

What is Optimism Bias?

The optimism bias refers to our tendency to overestimate our likelihood of experiencing positive events and underestimate our likelihood of experiencing negative events.

Where it Occurs

Consider the following scenario: Tom is a bright and motivated entrepreneur who is in the midst of starting his own restaurant. There had previously been six failed business attempts in the building he purchased. Each venture was unable to get the necessary returns to stay afloat and were forced to close. However, Tom felt as though he had what it took to make this restaurant succeed. He was at the top of his class, full of big ideas, and understood the pulse of young city-goers.

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