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Cognitive Biases

What is Optimism Bias?

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Optimism Bias is a tendency for judgment to be clouded by excitement for the future. It typically results in underestimates of cost and risk and overestimates of returns associated with a particular strategy or action. In many cases, early phases of a project or initiative begin with optimism and decline towards pessimism as problems materialize.
Optimism is also a personality trait that is considered an admirable quality associated with youth, resilience and willingness to take risk. Although optimism bias results in inaccurate predictions, in some cases it causes an organization to take risks that end up paying off even if they were more expensive than anticipated.
Japan's bullet train system, known as Shinkansen, began in 1958 with overly optimistic estimates that resulted in actual costs nearly doubling planned budget. Nevertheless, the system became remarkably successful and a source of competitive advantage for Japan's economy. It was also an early symbol of Japanese technical abilities that is still a source of national pride. It is widely acknowledged that the system would have never been built if initial cost estimates had been realistic. Not all optimism bias works out so well. It is a common source of expensive and tragic failures.
Overview: Optimism Bias
The tendency for excitement for the future to result in underestimates of costs and risk and overestimates of returns.
Related Concepts

Cognitive Biases

This is the complete list of articles we have written about cognitive biases.
Ambiguity Effect
Backfire Effect
Base Rate
Circular Reasoning
Cognitive Bias
Cognitive Dissonance
Complexity Bias
Crab Mentality
Creeping Normality
Curse Of Knowledge
Decoy Effect
Exposure Effect
False Analogy
False Hope
Fear Of Youth
Gambler's Fallacy
Golden Hammer
Halo Effect
Hindsight Bias
Negativity Bias
Optimism Bias
Peak-End Rule
Positive Bias
Sour Grapes
Survivorship Bias
Us vs Them
Victim Mentality
Wishful Thinking
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Cognitive Biases

A list of common cognitive biases explained.

Curse Of Knowledge

Why experts have trouble communicating.

Decoy Effect

A cognitive bias that is well known in marketing circles.

Biases vs Heuristics

The difference between biases and heuristics.

Information Cascade

A definition of information cascade with examples.

Functional Fixedness

A definition of functional fixedness with examples.

Boil The Frog

A definition of boil the frog, with examples.

Anecdotal Evidence

The definition of anecdotal evidence with examples.


The definition of scientism with examples.

Thought Processes

A list of thinking approaches and types.


A few logic terms explained.

Abstract Ideas

A few dangers of being too abstract.

Objective vs Subjective

The difference between objective and subjective.

Intellectual Diversity

A definition of intellectual diversity with examples.

Creative Value

The definition of creative value with examples.

Benefit Of Doubt

The definition of benefit of doubt with examples.


The definition of pessimism with examples.
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