Daniel Kahneman Quotes About Risk
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One of the major biases in risky decision making is optimism. Optimism is a source of high-risk thinking.
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Courage is willingness to take the risk once you know the odds. Optimistic overconfidence means you are taking the risk because you don't know the odds. It's a big difference.
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Lucky risk takers use hindsight to reinforce their feeling that their gut is very wise. Hindsight also reinforces others' trust in that individual's gut.
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Doubts are suppressed by groups... But remember that the internal incentives that shape how the group perceives risks and rewards may be very different from the reality of the risks and rewards in the external marketplace. Those incentives can distort risk perception.
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Optimistic people play a disproportionate role in shaping our lives. Their decisions make a difference; they are inventors, entrepreneurs, political and military leaders - not average people. They got to where they are by seeking challenges and taking risks.
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There's a tendency to look at investments in isolation. Investors focus on the risk of individual securities.
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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.
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Managers think of themselves as captains of a ship on a stormy sea. Risk for them is danger, but they are fighting it, very controlled.
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A plan is only a scenario, and almost by definition, it is optimistic... As a result, scenario planning can lead to a serious underestimate of the risk of failure.
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