Optimism linked to bad decision-making, lower cognitive ability: study

Optimism is a widespread and generally lauded human trait, but the results of a new study suggest that overly optimistic people are more likely to make bad decisions.

According to the study, people who have unrealistic optimism are more prone to "excessively risky behavior" and do not act with adequate caution. The impact on these traits is felt most when it comes to financial issues, when those with excessive optimism make risky choices and are prone to complications with saving and investing wisely.

"Unrealistically optimistic financial expectations can lead to excessive levels of consumption and debt, as well as insufficient savings. It can also lead to excessive business entries and subsequent failures," Dr. Chris Dawson of the University’s School of Management, said of the results. "The chances of starting a successful business are tiny, but optimists always think they have a shot and will start businesses destined to fail."