Class and field surveys revealed that personal inclination to take structured lottery-risk significantly correlates with optimism in financial forecasting. Trait optimism reflects in return predictions for successful and problematic stocks, in likelihood assessments of specific events, and even...

A field experiment revealed 3 forms of unrealistic optimism in skilled investors’ interval predictions of future stock returns. The judgmental intervals were about 50% shorter than realized spreads in recent 3–6months histories, suggesting that “underestimation of volatility” persists...