Individual speculators may lose from the resulting busts but society gains from their overoptimistic investments.

ECONOMIST: Buttonwood

Overoptimistic assumptions about future earnings on a pension fund artificially prop up earnings and thus rate a minus.

FORBES: How Pretty Are Those Earnings?

What we are seeing here is a correction of overoptimistic earnings forecasts.

FORBES: Cracks in the Nifty Fifty

My ancient cell phone's gas gauge is similarly overoptimistic, and as its aging battery holds less charge than ever, the extra-big spare keeps me connected.

FORBES: Spare Batteries

"People who say this will be a quick turnaround are really overoptimistic, " says Eric Bosshard of Midwest Research, who has been covering the company for ten years.

FORBES: Rebirth of a Sales Man

Nor is Germany prepared to repeat the mistakes made in Greece, Ireland and Spain, where the initial use of overoptimistic forecasts designed to minimize bailout bills contributed to an even worse economic outcome.

WSJ: Cyprus Needs to Find a Quick Debt Fix

And Mr Kahneman cites studies that show how overoptimistic chief executives (as measured by the amount of stock they own) were more likely to gear up their balance-sheets and pay too much for acquisitions.

ECONOMIST: Sometimes it helps if investors are gloomy

Dieter Helm, professor of energy policy at Oxford University, says the underlying assumptions about the costs of various technologies are likely to prove overoptimistic because they are produced by people who have an interest in exaggerating their viability.

ECONOMIST: Is it worth it?

The reality is that investors may have become overoptimistic on the prospects of housing and the speed of a possible recovery that will be slow and gradual at most, and will resemble more an upward climb than a walk in the park.

FORBES: Watch Out With Housing: Disapointing Sales And Sandy Reveal Weak Recovery