Confidence Before Realism

Humans are hardwired to deny reality, ie to emphasize what is possible and to underestimate what is practical, eg plan optimistically and disregard implementation; need a balance between "what is possible"& "what is practical". We chase fads or simplistic solutions, etc; self-interest dominates; people are over-confident and/or arrogant; use confidence & optimism to discount & ignore reality. This forms the basis for repeating the same mistakes from generation to generation. It explains how we underestimate the required effort, resources and time, and the capability of people to manage change. If we have high expectation/confidence/optimism, we perform better; need 3 times more positives than negatives to flourish; self-interest (WIIFM) dominates (balance it with altruism); we are more likely to see negatives/mistakes in work other do than our own; importance of apology. Use of training to understand level of competency; tend to reject information that threatens our assumptions; need to be aware of group think/shared views/ rationalisations, etc that result in denial of implications; need to prioritise & focus on vital few that have a major impact; don't confront poor performance as people hold an "inflated self-view"of themselves. People are over-confident, ie "illusory superiority"(with the less competent having the greater over-confidence). This can occur when using forecasting based on judgment & statistical models, such as:

- economists forecasting recessions (eg in the 1990s, 12 months in advance they predicted only 2 of the 60 recessions around the world)

- Future "super-powers"predictions

. in the 1980s, Japan was to be the next super-power

. in the 1990s, the 5 Asian tigers (Hong Kong, Taiwan, Singapore, Thailand & South Korea) were to be the next super-powers

. very few predicted the rise of BRIC (Brazil, Russia, India & China); the last 2 had population challenges

More on future "super-powers"predictions, ie Japan & 5 Asian tigers

- in the 1980s, Japan was to be the next super-power owing to its speedy economic recovery and growth since the end of World War 2 (1945). The period of rapid economic growth between 1955 and 1961 paved the way for the "Golden Sixties,"the second decade that is generally associated with the Japanese economic miracle. In 1965, Japan's nominal GDP was estimated at just over $91 billion. Fifteen years later, in 1980, the nominal GDP had soared to a record $1.065 trillion. Its phenomenal growth ended in the early 1990s with the "Japanese asset price bubble"and it has not recovered (2013)

- in the 1990s, the 5 Asian Tigers (Hong Kong, Taiwan, Singapore, Thailand & South Korea) were to be the next super-powers. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7 percent a year) and rapid industrialisation between the early 1960s and 1990s. They were developing into advanced and high-income economies, specializing in areas of competitive advantage. For example, Hong Kong and Singapore have become world-leading international financial centres, whereas South Korea and Taiwan are world leaders in manufacturing information technology. The Asian Financial crisis (1997) ended their phenomenal growth

(source: Wikipedia, 2013d & e)

 

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