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This article will look at optimism bias, why it is important to manage teams and what effects it can have on teams, who puts their efforts towards reaching a common goal. How it can affect the dynamics and effect-coordination in the team work. Regarding moral, motivation and expectations, as well as to both look at the positive and the negative effects of optimism bias. Look at the difference between strategic misinterpretation and optimism bias. ^[1]

As optimism and misinterpretation, in general, can have large effects, and can cloud and lead to under- and over-reactions in decision making. It is therefore important to recognise both the investors, teams and individuals' decision making. As the actions and reasoning (as people are seen to act radically). ^[2]

Give a general idea of how to manage, spot and handle optimism bias in (projects &) teams.

Optimism and biases in general

When looking at optimism in teams it is important to look at human behaviours, both form the individuals side as well as organisations mentalities. The following will establish base-knowledge about these behaviours.

In general biases and optimism is different ways that people are manipulated/influenced, either by themselfs or others. With a lot of factors in play.

The generel effects optimism has effects on (look into; different markeds, teams, investors, individuals, etc?)

Cognitive biases

Cognitive bias is a term referenced to as a broad term, which entails different kinds of biases. Cognitive bias isn't when someone else is trying to manipulate the an individual, but when the individual themselvs contaminate their information hindering them form making rational choices.

"Cognitive bias refers to a systematic (that is, non-random and, thus, predictable) deviation fromrationality in judgment or decision-making."

This doesn't mean that the decisions and choices agents make are unpredictable, but their are influenced and irrational in a predictable way. ^[3]

Suspected causes leading to Cognitive biases;

• Limited cognitive ressources, sorting out information as we have limited capabilities
• Emotion and motivation
• Social influence
• Mental shortcuts

Strategic misrepresentation

Strategic misrepresentation is when someone deliberately presents false information for their own benefits and strategic purposes. This mostly relates to the funding or acceptance of projects, where projects are presented to have lower cost and/or higher benefits than what is actually forecast, to look more appealing on paper. There are a lot of different reasons for the tendencies to make use of such a method, and is dignified with the mindset of ‘ends justify the means’. Here firms use strategic misrepresentation to get a job/project which can lead to profits. Strategic misrepresentation is seen frequently and with higher altitude where political organizations are involved, as they have a tendency to participate in big and expensive projects . Where there is a lot of pressure from the political organizations as they tend to put more pressure and attention on the projects. As it is important for political organizations to have their project accepted, as it can have an impact on political purposes. ^[4]

Tendencies for strategic misrepresentation

• Large projects with a lot of attention, and a high strategic importance usually have a large misrepresentation or bias, e.g. political bias, where there is to an extent a cognitive bias.

• Smaller projects, with low attention and/or strategic implications, the biases are more likely to be cognitive biases, e.g. optimism bias.

Uniqueness bias

Uniqueness bias in project management is when individuels in the project sees the project or management of the project to be more unique than what is actually is. Instead of looking broth project managers sees their projects as being singular and unique. This uniqueness bias comprehends learning form other projects as project managers sees their own projects as being unique and is therefore different form other projects. Managers who sees their projects as special and unique has a tendency to do worse than project managers who doesn't see their projects as unique. Projects with new technologies has a tendency to increase the illusion of uniqueness in projects, as there is still opportunity draw parallels form other projects. Uniqueness bias can lead to being narrow-minded and optimism, which can leave the project team with wrong estimates of risks, and therefore they might end up taking risky choices. ^[4]

Looking at individuals, individuals can also have a tendency to see themselfs as unique, especially good looking, healthy, smart etc.

Base rate bias / base rate neglect

Is a tendency to not look at ones data objectively. As well as putting more emphasis on one's knowledge without looking objectively at new or different knowledge, as well as thinking that one's knowledge is more important than it actually is.

Anchoring

Anchoring bias is when people tends to anchor on a certain piece of information. (more on later)

Optimism bias

Optimism bias is a cognitive bias, which is a human misinterpretation and tends to lead individuals to being way optimistic or casual regarding timelines and planned actions. Not to mistake it for Strategic misrepresentation, as also mentioned earlier is when others they to influence agents for statigic purposes. Here there is talk about the team, experts and/or management themselves having a mis-interpretation of the situation and are themselves not aware of being optimistic.

Mention; example or in depth

It is rare for forecasters to mention optimism bias to be stated as the cause of project delays, going over budget, change of scope etc. Here it is more terms like strategic misrepresentation, scope changes, weather conditions, fluctuating prices etc. which are mentioned. Meanwhile from a psychological point of view, it might be a different story.

Optimism bias can be a double edged sword (both good and bad), as it can be a driver for projects and can breed a positive and active attitude.

Teams

Defining a team “A teams puts their efforts towards reaching a common goal.” It is important to manage a team ^[1] Why is it important to manage a team

The Planning Fallacy (Writ Large)

When optimistic teams, are planing they have a tendency to plan extremely close to the timeline being optimal, not taking many repercussions and estimating their proces to be close to best-chase scenarios and not making room for failures or delay. (more details later) ^[4]

Managing teams and optimism bias

Lobby formation ^[5] ,

group size ^[5],

Generel management, Moral hazards and optimism bias

References

1. ↑ ^{1.0 1.1} DS/ISO 21502 (2020) Project, programme and portfolio mangement - guide on project management
2. ↑ Jian Wang, Xintian Zhuang, Jun Yang & Jiliang Sheng (2014) The effects of optimism bias in teams, Applied Economics, 46:32, 3980-3994, DOI: 10.1080/00036846.2014.948678
3. ↑ Blanco, Fernando. (2017). Cognitive bias. 10.1007/978-3-319-47829-6_1244-1.
4. ↑ ^{4.0 4.1 4.2} Bent Flyvbjerg, Project Management Institute (2021) Top Ten Behavioral Biases in Project Management: An Overview, DOI: 10.1177/87569728211049046
5. ↑ ^{5.0 5.1} Vincent Anesl (2014) Moral hazard and free riding in collective action, DOI:10.1007/s00355-008-0318-8