Excessive Optimism

This bias describes the tendency to believe that good outcomes of events outside our control are more likely than bad outcomes, despite what objective probabilities might suggest. It differs from overconfidence, which concerns events we think we influence.

NoteExample

Entering new markets

Investing in unfamiliar markets after a brief review period without adequate risk assessment or professional advice.

“We’ll read financial news for a week, and then invest in ETFs.”

Also relates to: Overconfidence · Illusion of Control · Extrapolation Bias · Hyperbolic Discounting