Self-serving tendencies and optimism are costing you.

Russian-British philosopher, 1909–1997

Let’s be honest: we suck at thinking about ourselves objectively. All of us have success blinders on and only focus on the upside of what we’ve done in the past, leading to misplaced optimism on future outcomes. Whether it be poker or life, this costs you money and/or missed opportunities.

Most of us believe we are better performers, more honest and intelligent, have a better future, have a happier marriage, are less vulnerable than the average person etc. But we can’t all be better than average. It’s a numbers game.

If you play poker, which most all of our readers do, haven’t you ever told yourself: I won the hand because I made a good decision and I lost the last hand due to variance. I hate to break it to you, but you’ve fallen victim to self-serving bad thinking. Overtime, this will become a very expensive bad habit we at Lodden Thinks implore you to give up.

Other examples we’ve all experienced

Nod (better yet, comment below) if you’ve personally experienced something similar below or know somebody who has.

1. Blackjack players who double down because they are “running good”. Ouch.
2. Entrepreneurs (particularly during the internet bubble) who think everything they touch turns to gold and when they do, the second will be equally as successful. Don’t factor out luck, timing, team etc. Not all you.
3. We breakup with a girl and tell ourselves it’s all her fault, not my own. The next one must be better right?! Think again, you’re telling yourself the wrong narrative buddy.
4. Penny stock over-night millionaires who are high on the dollar and think to themselves, “I’m the next Warren Buffet!”. Don’t be so optimistic.
5. Writing a college paper for English 101, coming up with a hypothesis, then scouring all books/sources to support your point, regardless whether or not it’s a good one. We ignore facts that run against our own argument.
6. Crush an opponent in sports, which leads to a self-sense of optimism and no preparation for the next game. You’re going to have a hard landing.

We’ve all had similar experiences countless times, whether we realize it or not. The key is to recognize the problem and work to avoid them. Our brain likes to work against us, rather than with us most of the time, and fortunately can be trained out of these natural habits.

Ways to avoid self-serving tendencies and optimism

Optimism is good but when it comes to important decisions, realism is better. Here are a few ways you can work to avoid our brains shortcoming.

1. Recognize your limits and build in some margin of safety into your decision making process. You can do this buy hyper-focusing on what can go wrong, and the consequences of them doing so.
2. Think backwards and questions your own thinking. Ask yourself: am I optimistic due to a false sense of reality, or do I truly have an underlying, repeatable advantage/edge?
3. If the only tool you have is a hammer, you approach every problem as if it were a nail. Develop repertoire of a diverse set of skills and ideas.

A lot of money and brain damage can be saved by acknowledging these tendencies exists and working to avoid them. Give it a shot and let us know how it goes or if you have any other suggestions in the comments below.

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If you liked learning about poor thinking and want to get better, go ahead and subscribe to our blog and obviously, play Lodden Thinks.

Originally published at loddenthinksblog.com on January 16, 2016.