No. 310 · Your own mind · Economics
Optimism Bias
We expect things to turn out better, faster and cheaper than they usually do.
In the Almanac
“The Sydney Opera House”, 1959–1973 · “Quibi”, 2020
Both stories in full, three ways to use it and where it misleads.
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Questions
What is Optimism Bias?
Optimism Bias is our tendency to expect things to go better, faster and cheaper than they will, and to believe risks that hit others will skip us.
How do you avoid Optimism Bias?
Counter it by running a premortem before big projects, checking what similar plans actually cost other people, and adding a buffer to your time and money estimates. Keep the optimism that gets you started, and pair it with honest planning for what could go wrong.
When does Optimism Bias matter?
Optimism Bias is one of the 31 mental models for your own mind, the situations where you ask: Is my own thinking leading me astray? Within that, it belongs to “Judging yourself, and your luck”, alongside Birth Lottery, Dunning-Kruger Effect and Fixed Mindset vs Growth Mindset.
What is an example of Optimism Bias?
Two stories show it at work: The Sydney Opera House (1959–1973) and Quibi (2020). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Optimism Bias?
Hofstadter’s Law, Inversion and Margin of Safety. Optimism Bias itself comes from economics.