Affective decision making: A theory of optimism bias

► We model decisionmaking under risk and uncertainty where risk is endogenous. ► We posit two cognitive processes interacting in an intrapersonal potential game. ► Observed choice is the result of a pure strategy Nash equilibrium in this game. ► We prove these potential games are refutable by axiomatizing the potential maximizers. ► That explains backfire of educational campaigns and gap in report and choice tasks.