Is optimism-bias a good or bad thing?

I've been thinking a lot about risk-taking lately. For better or worse, I have always been someone who takes risks at a higher-than-is-normal rate. In my Contracts class last fall, I learned about the concept optimism-bias. This concept is interesting. Often times humans are overly optimistic in themselves to their detriment. The example we studied was signing away your rights to engage in a risky activity believing you are the exception and that no harm will come to you. For instance, a river rafting trip has a lot of risks. There might be a pretty compelling reason to forgo the trip, however, lots of people take the risk anyway. I looked up some other examples of optimism bias on wikipedia: Students overestimate their own test scores. Grad students overestimate the number of job offers and salary they eventually will get. Almost all newlyweds think their marriages will last for life, well aware of high divorce statistics. Those who smoke believe they are less at risk to suffer from smoking-related disease than others who smoke.

I think that it is fantastic that we have optimism-bias hard-wired into us. Sometimes I have been burned by my optimism-bias. I have plenty of scars, have gone into debt, and even worked for free as a direct result of risks. But I have also been rewarded. One obvious example is the huge amount of time I invested into learning HTML and PHP. I think I will capitalize on these skills for the rest of my life.

Living in America allows this optimism to shine. You listen to someone's rags to riches story and even though you may not have any similar skills or talents as this person, the story inspires you. You believe in yourself, and believe that you can achieve similar success. And then you strive for something that pushes you further than you would have gone had that distant target never been there. Without an impetus to propel me further, I would sit still and stagnate.

The key to risk-taking is for a healthy balance between the two extremes. In business, too much risk leads to epic financial crises. Not enough risk leads to stagnation. But risks are absolutely a good thing (in moderation of course [but not too much moderation {it needs to be a wise amount and level of riskiness}]).

Optimism-bias may be one magical factor that sets us apart as uniquely human. If we were completely logical, and we made decisions based on mathematical probabilities, we would be robots; robots that probably wouldn't achieve as much as we humans have and will achieve.