![]() The following steps can help avoid optimism bias: When a negative event occurs, biased individuals are ill-prepared. Eventually, stock prices fell by almost 30% in the initial trading week-Hugh incurred a huge loss. He overlooked the fact that stock prices can even go down. Hugh had an optimistic bias-he blindly believed that his investment would yield record-high returns. Hugh, however, invested without attempting any analysis. read more to raise funds and clear debts Debts Debt is the practice of borrowing a tangible item, primarily money by an individual, business, or government, from another person, financial institution, or state. ![]() IPO is a means of raising capital for companies by allowing them to trade their shares on the stock exchange. It was releasing an IPO IPO An initial public offering (IPO) occurs when a private company makes its shares available to the general public for the first time. He comes across XYZ Limited the company was popular, but its finances were down. Let us assume that Hugh is an investor looking for the right IPO. Now, let us understand the effect of optimism bias in investments: Later, the country faced back-to-back COVID-19 waves, for which it was totally unprepared. The government was under the illusion that the economy Economy An economy comprises individuals, commercial entities, and the government involved in the production, distribution, exchange, and consumption of products and services in a society. In October 2021, the US government considered the pandemic a short-lived one. This bravado was not backed by any facts whatsoever, most ended up in a hospital. For instance, during the Covid pandemic, many people believed that they wouldn’t get infected and stopped following instructions. ![]() Optimism bias makes people careless-they stop taking precautions.
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