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.
Individuals who were submerged in reality, merely feeling their needs, emerge from reality and perceive the causes of their needs.
Every great man is always being helped by everybody, for his gift is to get good out of all things and all persons.
My love of dynamic complications often led me to avoid simplicity when perhaps it was the wisest choice.
When you make contact with your Higher Self, you'll have the support of Nature, which will allow for the manifestation of all you desire
Brevity is a great charm of eloquence.
The height of cleverness is to be able to conceal it.
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