Riskgaming Remembering Daniel Kahneman on optimism and self-confidence (Part 2)
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May 16, 2025 
In this engaging conversation, Josh Wolfe, a founding managing partner at Lux Capital, reflects on the intricacies of optimism and self-confidence. He delves into the optimism paradox, explaining how heightened positivity doesn’t always lead to success. Wolfe also shares insights on the perils of overconfidence in venture capital and the ethical considerations involved in decision-making. Additionally, the intriguing 'hot hand' phenomenon is explored, revealing how perception can often mislead our understanding of success, both in finance and sports.
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Optimism Powers Rare Success
- Despite high failure rates, extraordinary successes like Elon Musk and Bill Gates show optimism fuels rare, high-impact achievements.
- Overconfidence is essential for entrepreneurs to attempt improbable ventures with outsized potential rewards.
Optimism Encourages Effort, Not Success
- Optimism mainly helps individuals start risky endeavors but doesn't increase their likelihood of success.
- Individuals often misjudge the odds; optimism encourages effort, benefiting the group's overall success.
Venture Capital Manufactures Confidence
- Sebastian Malaby describes venture capital as an industry that manufactures confidence for founders unaware of exact risks.
- Venture capitalists encourage risk-taking despite founders' ignorance of odds to drive innovation.