Are you generally an optimistic person?
If you asked most people, they would probably say “Yes”. That’s generally viewed as a good thing. Optimism can, for example, help us to remain positive in unfortunate circumstances and to avoid self-fulfilling negative prophesies. Scientists have suggested that we humans are, in general, naturally wired by evolution to see the ‘glass as half full’.
In decision-making, we may be influenced by a phenomenon known as Optimism Bias. This is subtlety different from “optimism” and it may lead us to poor decision-making if we are not aware of it. In broad terms, Optimism Bias leads us to believe that we are LESS likely to suffer from misfortune and MORE likely to achieve success or a lucky break than reality would actually suggest.
Here’s an example: if you are prone to Optimism Bias, you may put off booking that yearly dental check up or not put enough money aside for emergencies due to Optimism Bias. You know that emergencies arise and regular check-ups can save on costly dental treatment by nipping problems in the bud. However, somehow it doesn’t feel like the emergency or dental problem will happen to you.
Fortunately, if you are in the financial services industry and supporting clients in making financial decisions, you can use Wi-Ai tools to help your clients understand their susceptibility to certain biases, including Optimism Bias, and to take ownership of these.
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