Benutzer:Mo-zum/Optimism bias

2008-06-06T18:10:06Z

129.79.117.62: deleted bizarre, unnecessary sentence in intro

'''Optimism bias''' is the demonstrated systematic tendency for people to be over-optimistic about the outcome of planned actions. This includes over-estimating the likelihood of positive events and under-estimating the likelihood of negative events.

==Experimental demonstration==
Armor and Taylor review a number of studies that have found optimism bias in different kinds of judgement.<ref>Armor, David A.; Shelley E Taylor. "When Predictions Fail: The Dilemma of Unrealistic Optimism" in {{cite book|last=Gilovich|first=Thomas|co-authors=Dale Griffin, Daniel Kahneman (Eds.)| date=2002|title=Heuristics and biases: The psychology of intuitive judgment|location=Cambridge, UK| publisher=Cambridge University Press|isbn=0-521-79679-2}}</ref> These include:
* Second-year [[MBA]] students overestimated the number of jobs they would receive and their starting salary.
* Students overestimated the scores they would achieve on exams.
* Almost all the newlyweds in a US study expected their [[marriage]] to last a lifetime, even while aware of the [[divorce]] statistics.
* Professional financial analysts consistently overestimated corporate earnings.
* Most [[Tobacco smoking|smokers]] believe they are less at risk of developing smoking-related diseases than others who smoke.

Students in one study rated themselves as much less likely than their peers (students of the same sex at the same college) to experience negative life events such as developing a drink problem, having a heart attack, being fired from a job or divorcing a few years after getting married.<ref>{{cite journal|last=Weinstein|first=Neil D.|title=Unrealistic optimism about future life events
|journal=Journal of Personality and Social Psychology|date=November 1980|volume=39|issue=5|pages=806-820|id=1981-28087-001| accessdate=2008-05-27|doi=10.1037/0022-3514.39.5.806}}</ref>

Optimism bias does not apply universally. For example, people overestimate their chances of experiencing very low-frequency events, including negative events.

==Effects of overconfidence==

===Example : Increased risk taking and insufficient preventive care ===
Optimistic overconfidence bias can induce
people to underinvest in primary and preventative care and other risk reducing behaviors, like abstinence from [[smoking]].<ref>{{cite journal|last=Dunning||first=David|coauthors=Chip Heath, Jerry M. Suls|date=2004|volume=5|issue=3|pages=69–106| journal=Psychological Science in the Public Interest|title=Flawed Self-Assessment. Implications for Health, Education, and the Workplace}}</ref>

===Example : Credit card borrowing and penalty rates and fees===

Overconfidence causes many individuals to grossly underestimate their odds of
making a payment late. Statistically, many people are quite likely to make
at least one or more payments late due to the normal range of difficulties and
delays in day-to-day life. Overconfidence bias causes these
individuals to grossly underestimate the odds of this happening, and therefore to
accept grossly punitive fees and rates (for example an interest rate of nearly 30 %)
as a result of otherwise minor transgressions like a late payment. Other companies
now have extended on this approach, by increasing interest rates to punitive rates
for any late payment even if it is to another creditor. Overconfidence bias makes
these terms more acceptable to borrowers than if they were accurately calibrated.

Overconfidence bias also causes many individuals to substantially underestimate
the probability of having serious financial or liquidity problems -
for example from a sudden job loss or severe illness. This can cause individuals
to take on excessive debt under the expectation that they will do "better than average"
in the future and be readily able to pay it off.

===Overconfidence, locus[http://dictionary.reference.com/search?q=locus] of control and depression===

Overconfidence bias may cause many individuals to overestimate their degree of control as well as their odds of success. This may be protective against depression - since [[Seligman]] and Maier's model of [[Clinical depression|depression]] includes a sense of [[learned helplessness]] and loss of predictability and control. Depressives tend to be '''more accurate''', and less overconfident in their assessments of the probabilities of good and bad events occurring to them. This has caused some researchers to consider that overconfidence bias may be adaptive and/or protective in some situations.

===Optimism bias and planning===
{{main|Planning fallacy}}
Optimism bias arises in relation to estimates of [[cost]]s and [[benefits]] and duration of tasks. It must be accounted for explicitly in appraisals, if these are to be realistic. Optimism bias typically results in [[cost overruns]], benefit shortfalls, and delays, when plans are implemented.

The [[UK government]] explicitly acknowledges that optimism bias is a problem in planning and budgeting and has developed measures for how to deal with optimism bias in government ([http://www.hm-treasury.gov.uk/media/05553/Green_Book_03.pdf#search=%22HM%20Treasury%2C%20Supplementary%20Green%20Book%20Guidance%3A%20Optimism%20Bias%20(London%3A%20HM%20Treasury%2C%202003).%22 HM Treasury 2003]). The [[UK Department for Transport]] requires project planners to use so-called "optimism bias uplifts" for large transport projects in order to arrive at accurate budgets for planned ventures ([http://flyvbjerg.plan.aau.dk/0406DfT-UK%20OptBiasASPUBL.pdf Flyvbjerg and Cowi 2004]).

In a debate in [[Harvard Business Review]], between [[Daniel Kahneman]], [[Dan Lovallo]], and [[Bent Flyvbjerg]], Flyvbjerg (2003) – while acknowledging the existence of optimism bias – pointed out that what appears to be optimism bias may on closer examination be [[strategic misrepresentation]]. Planners may deliberately underestimate costs and overestimate benefits in order to get their projects approved, especially when projects are large and when organizational and political pressures are high. Kahneman and Lovallo (2003) maintained that optimism bias is the main problem.

==Mechanisms==
A [[Neuroimaging|brain-imaging]] study found that, when imagining negative future events, signals in the [[amygdala]], an emotion centre of the brain, are weaker than when remembering past negative events. This weakened consideration of possible negative outcomes is one possible mechanism for optimism bias.<ref>{{cite journal| last = Sharot| first = Tali
| coauthors = Alison M. Riccardi, Candace M. Raio, Elizabeth A. Phelps | title = Neural mechanisms mediating optimism bias
| journal = Nature | volume = 450| pages = 102-015| date = 2007-10-24
| url = http://www.nature.com/nature/journal/v450/n7166/full/nature06280.html| doi = 10.1038/nature06280| accessdate = 2008-05-27}}</ref>

== References ==
{{reflist}}

== Further reading ==
*[http://flyvbjerg.plan.aau.dk/HBR0312ASPUBLISHED.pdf [[Flyvbjerg]], Bent, 2003. "Delusions of Success: Comment on Dan Lovallo and Daniel Kahneman." Harvard Business Review, December Issue, pp. 121-122.]
*[http://flyvbjerg.plan.aau.dk/Publications2006/Nobel-PMJ2006.pdf Flyvbjerg, Bent, "From Nobel Prize to Project Management: Getting Risks Right." Project Management Journal, vol. 37, no. 3, August 2006, pp. 5-15.]
*[http://flyvbjerg.plan.aau.dk/0406DfT-UK%20OptBiasASPUBL.pdf Flyvbjerg, Bent and Cowi, Procedures for Dealing with Optimism Bias in Transport Planning: Guidance Document (London: UK Department for Transport, June 2004). 61 pp.]
*[http://flyvbjerg.plan.aau.dk/JAPAASPUBLISHED.pdf Flyvbjerg, Bent, Mette K. Skamris Holm, and Søren L. Buhl, "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association, vol. 68, no. 3, Summer 2002, pp. 279-295.]
*[http://www.hm-treasury.gov.uk/Economic_Data_and_Tools/Greenbook/data_greenbook_index.cfm HM Treasury, Supplementary Green Book Guidance: Optimism Bias (London: HM Treasury, 2003).]
*[[Kahneman]], Daniel and Dan Lovallo, 2003. "Response to Bent Flyvbjerg." Harvard Business Review, December Issue, p. 122.
*Lovallo, Dan and Daniel Kahneman, 2003. "Delusions of Success: How Optimism Undermines Executives' Decisions," Harvard Business Review, July Issue, pp. 56-63.
* Matlin, Margaret W. "Pollyanna Principle" in {{cite book | last=Pohl |first=Rüdiger|title=Cognitive Illusions: a handbook on fallacies and biases in thinking, judgement and memory | publisher=Psychology Press|date=2004|isbn=978-1-84169-351-4}}
* Lev Virine and Michael Trumper. ''[http://www.projectdecisions.org Project Decisions: The Art and Science]'', Vienna, VA: Management Concepts, 2008. ISBN 978-1567262179

== See also ==
*[[List of cognitive biases]]
*[[Cost-benefit analysis]]
*[[Cost overrun]]
*[[Cost underestimation]]
*[[Benefit shortfall]]
*[[Planning fallacy]]
*[[Reference class forecasting]]
*[[Rosy retrospection]]

[[Category:Cognitive biases]]

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Benutzer:Mo-zum/Optimism bias