Why are we so optimistic?

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About 25 percent of us are born with the “optimism” gene. This group is what we refer to as “naturally optimistic,” because, well, they were born that way. A good portion of the remaining population is optimistic, but they got there through environmental factors like family, friends, and life experiences. 

Whether you are optimistic because of nature or nurture, why is this bad for decision making?

Let’s take the example of Raj Gupta, former chairperson of McKinsey & Co., the world’s most respected consulting firm. Gupta sat atop the business world and spent his time advising presidents, kings, and business leaders around the globe. Upon his retirement, he was an in-demand board member for prestigious companies such as Proctor and Gamble and Goldman Sachs.

With all those secret board meetings and relationships with CEOs, Gupta was a goldmine of information for Rajaratnam. For the optimistic Gupta, it was a chance to make huge money trading with Rajaratnam. Why shouldn’t Gupta be optimistic? Everything he had ever done in his business career had worked, why not a couple of stock trades?

Cutting to the end of the story: Rajaratnam was sentenced to 11 years in prison and Gupta sentenced to 2 ½ years for insider trading. Oddly, they wound up in the same prison. 

Gupta’s optimism blinded him to the risks. Blinded by the Upside is one of the Seven Deadly Stupidities. Gupta lost everything because of his blind optimism. 

Key Takeaways

1. Keep your optimism under control. Nothing is ever THAT great.

2. See if others share your optimism or are you taking a narrow view of the decision or situation?

3. Failure is an option. Remember this.

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