- Bob: My idea will be a million-dollar idea.
- Ted: My idea will be a million-dollar idea.
- Sue: My idea will be a million-dollar idea.
The valence effect:
- We overestimate positive things happening to us.
Ask classroom of kids how rich they'll be. An overwhelming majority would say they will be richer than the average student in the room.
Translate that to grownups
- Go to a conference filled with aspiring entrepreneurs.
- Most folks will probably tell you/others/etc. that their ideas are the next big things. OH THIS THING WILL BE BIG I CANT TELL YOU BECAUSE IT'S IN STEEEEAAALLLLLTTTHH MODE
Overconfidence has wrecked everything from elite football teams to powerful societies, and will continue to do so because we psychologically have an inherent mechanism to keep us safe from threat.
Our ancestors needed that mindset to keep hope alive to survive.
Because our human minds delude ourselves into predicting positive outcomes, we go about building our businesses in a complacent/lazy/SUCK fashion.
Instead of busting our butts, the valence effect makes us think:
- HEY! I'm going to be successful!
- So, I will put in the amount of work that I THINK will make me successful!
Because you overestimate the probabilities that you will be successful, you put in less work than you would need to reach your goals.
So what do you do?
Compensate for your biases.
- I believe doing X will make me successful.
- Now, because my human mind tricks me into believing overly positive outcomes, I must compensate for my mind.
- Therefore, I will put in twice the amount of work/marketing/publicity/networking/iterating/etc./etc. that I believe it takes to reach my goals.
Beat your positive biases into submission.
Posted on January 25
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