OPTIMISTIC ENTREPRENEURIAL BIAS

This is an extremely common bias among entrepreneurs, and is the inability to realistically assess the chances of success of a decision, perceiving much more chance of success than is actually the case. In addition, it is often accompanied by a confirmation bias (see TIP)which is a great recipe for disaster.

It is this bias that leads all entrepreneurs to think that they are the exception, that although the failure rate is 80%, they are among the 10%.

And, although it is true that entrepreneurs tend to be more optimistic than necessary (because if they were not, surely no one in their right mind would undertake certain sectors or situations), it is important to be aware of when we are not being rational in assessing the likelihood of failure of a decision.

The great danger of this inclination towards optimism is overconfidence, which can distort your picture of reality.

For example, this bias may prevent you from saving for your retirement, either fully trusting that the public pension will cover your needs, or that you do not save enough, underestimating the real needs you will have when you retire.

On the investment sideThis overconfidence, coupled with an aversion to loss, can cause you to hold on to a losing stock and don't apply the old adage of cutting your losses. Here There is often a mixture of refusal to accept that you have made a mistake and confidence that the value will rebound.