![]() The Eurofighter Typhoon, a joint defence project of several European countries, was delivered over four years late at a cost of £19 billion instead of £7 billion.Denver’s new International Airportopened 16 months late, with a final cost of $4.9 billion, at a cost overrun of $2 billion (with some estimates as high as $3.1 billion over budget).Researchers investigating the fallacy found that when students were asked by what date they were 99% certain they would finish their project, only 45% actually finished by the date they had suggested.Īnd it’s not just students who are susceptible…. This is a tendency for people and organisations to underestimate how long they will need to complete a task. Related to optimism bias is the planning fallacy. We might be lucky enough to experience a turn of good fortune, but it’s likely we’ll still get our fair share of bad things happening to us! This simple exercise revealed our tendency toward unrealistic optimism: whilst around 60% of events in people’s past tended to be positive, they believed the future would fare much better, with over 80% of events being positive (see image below). People were asked to recall and rate how positive or negative events of great significance in their past were – and the same for anticipated future events. They conducted a fascinating experiment called ‘The Optimism Challenge’. This was illustrated cleverly in a recent collaboration between Prudential and Dan Gilbert, a Professor of Psychology at Harvard University. ![]() Unless we are extremely optimistic – when we may make dangerous choices – a little bit of optimism can help us to get through life. ![]() This found that asking people either for their predictions based on realistic “best guess” scenarios or for their hoped-for “best case” scenarios produced indistinguishable results! Our tendency to be optimistic however, is thought to help motivate us and protect our mental health. Neuroscientists estimate that around 80% of us are affected by optimism bias to some degree.Ī clue to the underlying problem can be found in another study. More simply, people think they’ll be luckier than they are likely to be. The Optimism Bias describes our tendency to predict the future with rose-tinted spectacles, in that we overestimate our likelihood of experiencing good life events and underestimate the likelihood of suffering negative events.
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