Psychology

There is a naïve form which doesn't recognise the bubble, and thinks that real-estate will go up forever. There is then a second order overconfidence where someone recognises a bubble but feels they will escape it when other people don't.

Nobel Prize Winner in Economics for Behavioral Economics Research

One of the sources of overconfidence in our ability to forecast the future is the great ease with which we find explanations for the past. That's a very significant mechanism that produces overconfidence.

Nobel Prize Winner in Economics for Behavioral Economics Research

Many entrepreneurs are deluded about their odds of success, that evidence is very clear. This creates problems… Should a government subsidise entrepreneurs who greatly over-estimate their chances of success?

Nobel Prize Winner in Economics for Behavioral Economics Research

You cannot understand entrepreneurial activity without understanding optimism. Research has shown that optimism and overconfidence in individuals is directly linked to their engagement in entrepreneurial activity.

Nobel Prize Winner in Economics for Behavioral Economics Research

Bubbles are driven by people piling into ideas now, that they think will make them lots and lots of money in the future. The more people that pile in, the more quickly innovation can spread... But if the capital is misallocated? then when the money meets common sense, you get a bust.

What crises actually do is expose the underlying fragility and structural flaws within an economy and society. Some of this is endemic – financial markets are fragile because they are giant pools of sentiment and leverage at their heart.

We always think of every crisis as being somehow different and unique to us. That is human myopia. The reality is that the perennial pattern we see is universal and immemorial.

...in situations of high uncertainty, personal information exchange may reach market-wide impacts, as the examples of bank runs and speculative attacks on national currencies show.

When you've founded a business, the last thing you want to do is let-go. It's part of the psychology of most founders- but let-go you must, and if you handle it right, it can work extremely well.

Research has shown that when you compare the effect of a 1% change in unemployment rate and 1% change in the inflation rate; a 1% increase in unemployment has a bigger impact on people's happiness than a 1% increase in inflation.

Economist known for the Easterlin Paradox on income and happiness

Happiness is a measure that reflects the success with which people achieve their personal objectives of living levels, happy and healthy families and satisfying work.

Economist known for the Easterlin Paradox on income and happiness

Steve Jobs forced me to figure out what was important to me, and who I was. He demanded that everybody in the room had to be at the top of their game, the best in their field.

They all had a wilful denial of reality… against all evidence to the contrary they had to believe they would succeed.. that's ultimately what entrepreneurs do.

Guess what, it turns out that you can't make big-breakthroughs without crazy optimism and idealism! With the exception of Elon Musk, that attitude is largely missing right now.

Stress doesn't come from what's going on in your life. It comes from your thoughts about what's going on in your life.

Don't make the mistake of confusing net worth and self-worth.