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Optimism Bias: Definition, Examples and Effects

Updated: Nov 17, 2023

Optimism bias is a cognitive bias that causes people to believe that they are less likely to experience a negative event (or events) than others. It is a form of self-deception that can lead to unrealistic expectations and poor decision-making.


Health Risks: People often underestimate their own likelihood of experiencing serious health problems, like heart disease or cancer, while acknowledging that these risks are significant for the general population. For instance, a smoker might believe that they are less likely to develop lung cancer or other smoking-related diseases than other smokers, even if statistics and scientific research suggest otherwise.

Financial Decisions: Many people believe that their investments will perform better than the market average. For instance, a person might think that they're less likely to suffer a financial loss from their stock market investments, despite knowing that the market is inherently risky and volatile. This can lead to overconfidence and potentially risky financial behaviors, such as not diversifying one's investment portfolio sufficiently.


Optimism bias can have a wide range of effects on individual behavior, decision-making, and perception of risk. While it can have some positive impacts, it often leads to misjudgments and issues in various aspects of life. Here are some of the key effects:

Underestimation of Risks and Challenges: People experiencing optimism bias tend to underestimate the likelihood of experiencing negative events. This can lead to insufficient preparation for potential risks, be it in personal health (like ignoring the risks of smoking or unhealthy diet), financial decisions (like underestimating the risks in investments), or general safety (like not wearing seatbelts or helmets).

Inadequate Planning and Preparation: Optimism bias is linked to the planning fallacy, whereby people underestimate the time, effort, and resources needed to complete tasks. This can lead to missed deadlines, budget overruns, and unmet goals.

Social and Professional Relationships: In social and professional settings, optimism bias can affect how people interact with others. It might lead to overpromising and underdelivering, which can strain relationships and credibility.

Response to Warnings and Advice: People with a strong optimism bias may be less receptive to warnings, advice, or negative feedback, potentially leading to decisions that overlook important considerations.

Resilience and Persistence: On the positive side, optimism bias can enhance resilience and persistence. Believing in positive outcomes can motivate people to persevere in the face of challenges and setbacks.

Impact on Well-being and Mental Health: Generally, a certain level of optimism is associated with better mental health and well-being. It can reduce stress and increase overall life satisfaction. However, excessive optimism, ignoring real risks, can lead to significant negative consequences.

Overall, optimism bias can be a double-edged sword. It is important to be aware of this bias and to take steps to mitigate its effects (such as seeking out other perspectives, conducting careful risk assessments, reflecting on past experiences, and seeking constructive criticism).

Do you want to expand your knowledge on this topic? Read our full in-depth article on cognitive biases.

Do you have extra 15 minutes today? Take our fun and interactive quiz to learn which of 16 reasoning styles you use, your overall level of rationality, and what you can do now to improve your rationality skills.


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