How unrealistic optimism is maintained in the face of reality
How unrealistic optimism is maintained in the face of reality
Tali Sharot, Christoph W Korn & Raymond J Dolan
Nature Neuroscience
14, 1475–1479 (2011)
doi:10.1038/nn.2949
Published online 09 October 2011
Unrealistic optimism is a pervasive human trait that influences domains ranging from personal relationships to politics and finance. How people maintain unrealistic optimism, despite frequently encountering information that challenges those biased beliefs, is unknown. We examined this question and found a marked asymmetry in belief updating. Participants updated their beliefs more in response to information that was better than expected than to information that was worse. This selectivity was mediated by a relative failure to code for errors that should reduce optimism. Distinct regions of the prefrontal cortex tracked estimation errors when those called for positive update, both in individuals who scored high and low on trait optimism. However, highly optimistic individuals exhibited reduced tracking of estimation errors that called for negative update in right inferior prefrontal gyrus. These findings indicate that optimism is tied to a selective update failure and diminished neural coding of undesirable information regarding the future.
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February 24th, 2012 at 5:23 pm
All I know is that if there isn’t a huge market correction I will have to assume that balancing forces of the universe the Yin/Yang principle have all disappeared. There has to be a balance that is not made by man somewhere in all this. These forces would not allow those who disturbed the worlds economy fix those mistakes and get away with all the money while others suffer from their mistakes . There can be no greater disconnect. So Watch Out positive thinkers!!
Barry I dare you to read this sometime @10pm but its definitely too heavy for those who think everything fits neatly into what they know and what is known. I think you will enjoy it although some of your followers just wont get it. This is a bubble we don’t want to pop.
http://www.crystalinks.com/holographic.html
February 24th, 2012 at 6:26 pm
“These findings indicate that optimism is tied to a selective update failure and diminished neural coding of undesirable information regarding the future.”
Here’s an example of errant optimism I have observed in the last few years and see as forthcoming in the years to come. -
“Reward success” –
Banking execs, derivatives traders and HF managers that made this argument in 08-09 to rationalize 7, 8 & 9 figure salaries have been hit with the rude realization that their version of “success” is theirs alone – I imagine there are car thieves who feel the same way about the “reward”, the difference being that they largely know what they do is not noble.
This also applies to 8 figure salaried health insurance execs who used their monetary influence over my government to mandate the purchase of their products, while over 40,000 Americans die each for lack of funds to afford their products in the first place.
This errant optimism is epidemic in every sector, fueled by the allowance of blatant bribery despite the Constitution
Specifically among the wealthiest who are completely insulated from the realities of middle and lower class life in America, from Mitt Romney’s self deluded thinking that his paying less than 15% somehow “trickles down” to the rest of us, yet at the same time his circles propose we cut medicare or Social Security to offset the resultant deficit his class’s lack of revenues have created.
Rupert Murdoch, Charles & Dave Koch, buying my government, using their massive pools of money to buy air time to fear-monger the public into voting for their political puppets, lest we live under the reign of “government takeovers” and “death panels”.
Errant optimism.
They probably believe, down inside, that what they’re doing is in the best interest of the whole.
They need to wear the shoes of an iron worker, electrician, carpenter or a plumber for a year to truly understand the reality is that they are inflicting an evil not seen since Europe during WW2.
Hitler, Mussolini…they too were optimistic that they were doing was in everyone’s best interest, at the point where the Wiemar Republic allowed Hitler to bypass their Constitution to “defend against Communism”, Hitler was given complete reign over the rule of law, subject only to his own self assessment….we know what his unchecked self assessment led to.
He too was optimistic about the future outcome of his actions.
February 24th, 2012 at 8:08 pm
Your Peter Lynch quote is telling. Fidelity sure wasn’t peddling that 6 out of 10 shit when they had a choke hold on my 401(k) and he was the guy. In fact I don’t hear or see that (truthful) crap anywhere but on blogs like these. Is the 60 percent story the one new clients get today? Bwahahah.
February 24th, 2012 at 8:20 pm
Mitt Romney’s economic speech falls flat at near-empty stadium
http://www.guardian.co.uk/world/2012/feb/24/mitt-romney- economic-speech-falls-flat-stadium
The obtuse cluelessness of the number one GOPer is hilarious. Did he think human beings were going to turn out in droves to hear him expatiate on how tax cuts for the rich will pay for themselves?
Obama gets people. Romney hasn’yt seen a hundreth of Obama’s tough times.
February 25th, 2012 at 8:50 am
Unrealistic optimism is very much an American trait. I’m not sure it even exists at all in most countries.
It is a huge benefit to us and a huge detriment as well. It is why our ups are so powerful and downs so unexpected.
As we mature as a nation, the next major downcycle will wash much of this away. For years, Americans have been able to ‘assume’ there would be high paying jobs, super high quality of life, solid infrastructure, new exciting trends etc. But much of that is over and what’s left is being paid for with megatons of unpayable debt. We will move forward but will never be the same when the credit ponzi finally ends.
February 25th, 2012 at 8:30 pm
The results of the brain scans suggested why this might be the case. All participants showed increased activity in the frontal lobes of the brain when the information given was better than expected, this activity actively processed the information to recalculate an estimate.
However, when the information was worse than estimated, the more optimistic a participant was (according to the personality questionnaire), the less efficiently activity in these frontal regions coded for it, suggesting they were disregarding the evidence presented to them.
It explains as to why Ben Bernanke did not see subprime and housing crisis, and why today he disregards (subconsciously) overwhelming evidence that his policies are hurting the actual economy (Russell 2000 is not the actual economy).