Why people are unrealistically optimistic even when the stakes are high

People are unrealistically optimistic even when the stakes are high. About 50 percent of marriages end in divorce, and this is a statistic most people have heard. But around the time of the ceremony, almost all couples believe that there is approximately a zero percent chance that their marriage will end in divorce – even those who have already been divorced! (Second marriage, Samuel Johnson once quipped, ‘is the triumph of hope over experience.’) A similar point applies to entrepreneurs starting new businesses, where the failure rate is at least 50 percent. In one survey of people starting new businesses (typically small businesses, such as contracting firms, restaurants, and salons), respondents were asked two questions: (a) What do you think is the chance of success for a typical business like yours? (b) What is your chance of success? The most common answers to these questions were 50 percent and 90 percent, respectively, and many said 100 percent to the second question.

Unrealistic optimism can explain a lot of individual risk taking, especially in the domain of risks to life and health.

The failure rate applies to other businesses. Ours has passion, a Notion board and a founder who wakes at 5am. Excellent. Suppliers will now answer immediately, nobody will get ill and the software will behave out of respect for the roadmap.

Optimism earns its place. Starting a company, marriage or difficult creative project requires energy that a laminated sheet of base rates will never provide. Nobody proposes beneath a pie chart. The stupidity begins when hope moves from motivation into forecasting. Confidence may improve effort; the supplier’s lead time remains unmoved by your enthusiasm.

Look at comparable projects before declaring this one exceptional. What normally goes late? What normally costs more? Which specific advantage changes those odds here? “We care more” counts only if every failed venture was founded by people who could not be arsed. “Strong team” and “market momentum” belong in the same scented bin, alongside risk registers where every red box turns amber before important eyes arrive.

Keep the ambitious goal and build an unromantic plan underneath it. Leave reserve. Imagine how the thing failed and see whether the obvious cause is already waving from page one. Agree which signal forces a rethink while changing course still looks like judgement rather than humiliation. Hope belongs in the story about where you are going. Keep it away from the arithmetic on how many engineers are available in November. Build for the morning when the world declines to prioritise your vision statement. That morning is already in the calendar.