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- Definition: This is a type of cognitive bias where people tend to overestimate the likelihood of positive outcomes and underestimate the likelihood of negative outcomes.
- Application: In the context of the startup, the founders might be overly optimistic about the success of their new product, believing that it will be a game-changer without adequately considering potential challenges or market competition. This optimism can lead to underestimating the resources needed, overestimating the market demand, or ignoring potential regulatory hurdles.
Confirmation Bias:
- Definition: This bias involves favoring information that confirms one’s preexisting beliefs or hypotheses while disregarding or minimizing information that contradicts them.
- Application: The founders might selectively gather and interpret data that supports their belief in the product’s success, such as positive feedback from a small group of early adopters, while ignoring broader market research that suggests a lukewarm reception. This can lead to a skewed understanding of the product’s potential and market fit.
Anchoring Bias:
- Definition: This is the tendency to rely too heavily on the first piece of information encountered (the “anchor”) when making decisions.
- Application: