Introduction to the Video
Optimism bias—a common behavioural tendency where we overestimate our control and expect overly positive outcomes—can be particularly harmful for investors. In this video, Professor Bent Flyvbjerg explains how this bias affects decision-making and shares practical strategies to counteract its influence.
Flyvbjerg highlights how optimism bias leads investors to make subjective decisions, like trying to time the market, which often results in costly mistakes. He recommends recognising this bias as the first step to mitigating it, followed by "de-biasing" through reliance on empirical data to ground decisions.
The video also emphasises the value of reducing subjective decision-making by adopting systematic, rule-based investment strategies—such as regularly scheduled investments or using passive index funds. These approaches minimise opportunities for bias to take hold and help investors make more rational, disciplined choices.
Whether you're an experienced investor or just starting out, this video offers insightful advice on how to protect yourself from optimism bias and make smarter, more consistent financial decisions.
Disclaimer: This video does not constitute financial advice. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals. Financial markets may go up or down, and you are not guaranteed a return on your investment. Past performance is not necessarily a guide to future performance.
