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Optimism bias or optimistic bias is a cognitive bias that causes someone to believe that they themselves are less likely to experience a negative event. It is also known as unrealistic optimism or comparative optimism .
It was found that individuals showed less optimistic bias when they were allowed to see others' answers. [ 13 ] Perloff and Fetzer (1986) suggested that when making peer comparisons on a specific characteristic, an individual chooses a comparison target—the peer to whom he is being compared—with lower abilities.
There are several potential risks that may arise if people hold positive illusions about their personal qualities and likely outcomes. First of all, they might set themselves up for unpleasant surprises for which they are ill-prepared when their overly optimistic beliefs are disconfirmed. They may also have to tackle the consequences thereafter.
Plus, being more optimistic has even been associated with a longer lifespan and exceptional longevity (living to over 90 years old), according to a study in the Journal of the American Geriatrics ...
They found that when people were induced to think about a deadline as distant (i.e., much time remaining) vs. rapidly approaching (i.e., little time remaining), they made more optimistic predictions and had more thoughts of success. In their final study, they found that the ease of generating thoughts also caused more optimistic predictions. [10]
Meta CEO Mark Zuckerberg is among the world’s wealthiest individuals, with a net worth topping $100 billion. While a number of factors explain his success, one might simply be his optimistic nature.
(Where α is the risk-adjusted return over the S&P 500. This is the standard measure of mutual fund out-performance). This is the standard measure of mutual fund out-performance). Additionally, in the financial field survivorship bias is the use of a current index membership set rather than using the actual constituent changes over time.
To do this, we multiply a test vehicle's real-world mpg result by the size of its fuel tank and round down to the nearest 10-mile increment so that our estimate isn't overly optimistic.