Optimism bias is the tendency to overestimate the likelihood of positive events and underestimate the likelihood of negative events happening to you personally — even when you know the base rates.

How Pervasive It Is

Studies consistently show 80% of people believe they are less likely than average to experience divorce, cancer, car accidents, or job loss — a statistical impossibility.

Why It Exists

Optimism bias is partly adaptive. People who believe they will succeed try harder, persist longer, and cope better with setbacks. Completely unbiased people tend toward mild depression.

When It Becomes Dangerous

• Underinsurance — "It won't happen to me"
• Inadequate emergency savings — things will work out
• Health behaviors — smokers consistently underestimate their personal cancer risk vs. other smokers
• Startup founders — funding projections that assume the best-case scenario

The Balance

Use optimism as motivation. Use probabilistic thinking and base rates for planning. The goal is calibrated optimism — hopeful about outcomes, honest about risks.

Reference:

Wikipedia: Optimism Bias

https://en.wikipedia.org/wiki/Optimism_bias