Why people tend to underestimate their chance of experiencing adverse effects.

The 

Optimism Bias

, explained.

What is Optimism Bias?

Optimism bias sometimes referred to as “unrealistic optimism”, refers to the tendency for individuals to underestimate their probability of experiencing adverse effects (such as failure or cancer) despite the evidence.

Description

In essence, it leaves people feeling that they are at less risk than they really are, leaving them more willing to take risks. Another way of looking at it is that optimism bias is the difference between our feeling of hope and reality – humans tend to be predisposed to feeling hope.

Example

Despite the fact that the overwhelming majority of entrepreneurial ventures fail, most entrepreneurs believe that their business has a reasonable to high chance at success.