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Positive Illusions

In: A Theory of Dynamic Preferences

Author

Listed:
  • Christo A. Pirinsky

    (University of Central Florida, Business Administration and Finance)

Abstract

As noted in the previous chapter, given its inherent risks, exploration is under-incentivized genetically. As a result, people develop alternative ways to motivate exploration. This chapter argues that a wide set of psychological biases, under the name positive illusions, could be justified as a mechanism promoting exploration. The chapter analyzes in detail four specific biases within this category—optimism, overconfidence, illusion of control, and planning fallacy. Positive illusions are a form of self-deception, and the people holding these beliefs are more likely to set up unrealistic goals and make costly mistakes. As a result, it is unclear why such beliefs have been favored in natural selection. The framework developed in this book suggests that positive illusions could be beneficial because they promote exploration. The chapter also argues that, by promoting a more positive outlook in life, religious faith and some superstitious beliefs could also incentivize people to explore more.

Suggested Citation

  • Christo A. Pirinsky, 2026. "Positive Illusions," Springer Books, in: A Theory of Dynamic Preferences, chapter 4, pages 53-71, Springer.
    • Handle: RePEc:spr:sprchp:978-3-032-13334-2_4
    DOI: 10.1007/978-3-032-13334-2_4
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