However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty.
Interpretation
Optimism can lead to a preference for falsehoods over truth, particularly in competitive environments.
In this quote, Daniel Kahneman highlights the societal and market tendency to value optimism, often resulting in the reward of misleading information over truthful insights. The financial crisis exemplifies how competition among experts can foster a collective disregard for risks and uncertainties, ultimately contributing to detrimental outcomes.
In practice
In a discussion about the financial crisis, one could say, 'As Daniel Kahneman pointed out, optimism can overshadow the truth, leading to reckless decisions.'
We think, each of us, that we're much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it's the other way around. We believe in the reasons, because we've already made the decision.
The average investor's return is significantly lower than market indices due primarily to market timing.
Banks are run by executives, and executives protect themselves, and that does not always mean that banks are going to behave rationally.
Laziness is built deep into our nature.
Through some combination of culture and biology, our minds are intuitively receptive to religion.
You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general.
may my heart always be open to little birds who are the secrets of living
I think we've debunked the myth of talent. It doesn't appear that there's anything like a music gene or center in the brain that Stevie Wonder has that nobody else has.
When we learn from experience, the scars of sin can lead us to restoration and a renewed intimacy with God.
Those who understand only what can be explained understand very little.
Wise and humane management of the patient is the best safeguard against infection.
Ignorance has no beginning, but it has an end. There is a beginning but no end to knowledge.
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