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date: 25 February 2024

optimism bias 

A Dictionary of Business and Management

Jonathan Law

The tendency for people to be optimistic about future events, especially those seen as following from their own plans and actions. Studies have suggested that this is a universal cognitive bias, possibly with a biological origin. Although optimism may be a stimulus to enterprise, it has obvious dangers: these include increased risk taking (including neglect of basic precautions), failure to estimate probabilities accurately, and inadequate contingency planning. In drawing up plans, schedules, and budgets there is a demonstrated tendency for managers to underestimate costs and duration and to overestimate benefits (... ...

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