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Questions and Answers
What is the main characteristic of the optimistic bias?
What is the main characteristic of the optimistic bias?
- Tendency to underestimate positive events
- Tendency to overestimate positive events (correct)
- Tendency to overestimate the likelihood of negative events
- Tendency to underestimate negative events
How does overconfidence bias affect decision-making?
How does overconfidence bias affect decision-making?
- It leads to overestimation of accuracy and reliability (correct)
- It leads to underestimation of risks and costs
- It leads to underestimation of one's abilities
- It leads to underestimation of potential delays
What is the planning fallacy associated with?
What is the planning fallacy associated with?
- Underestimating the benefits of future actions
- Making overly pessimistic predictions about time estimation
- Overestimating the time, costs, and risks of future actions (correct)
- Neglecting potential delays and unforeseen issues
Which example best illustrates the planning fallacy?
Which example best illustrates the planning fallacy?
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What is the key outcome of the optimistic bias?
What is the key outcome of the optimistic bias?
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Study Notes
Cognitive Biases
- The optimistic bias is characterized by people's tendency to be overly optimistic about the future and underestimate the likelihood of negative events.
Overconfidence Bias
- Overconfidence bias leads to poor decision-making as individuals overestimate their abilities and knowledge, causing them to take unnecessary risks and ignore potential pitfalls.
Planning Fallacy
- The planning fallacy is a cognitive bias that refers to the tendency to underestimate the time, resources, and effort required to complete a task.
- The planning fallacy is often associated with overly optimistic predictions about the timeline and outcome of a project.
Example of Planning Fallacy
- For instance, a student might think they can complete a complex assignment in a few hours, but in reality, it takes several days to complete, illustrating the planning fallacy.
Outcome of Optimistic Bias
- The key outcome of the optimistic bias is that individuals tend to underestimate the likelihood and consequences of negative events, leading to poor planning and decision-making.
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