This dissertation describes the development and validation of a 10-item scale measuring individual differences in wishful thinking, or the degree to which individuals’ desires bias their judgments. A study was conducted to investigate the new scale’s psychometric properties, as well as its relationships with other self-report measures. The wishful thinking measure demonstrated convergent validity with other measures of bias, including self-deceptive enhancement, belief in a just world, and social desirability. Wishful thinking showed discriminant validity with several dimensions of problem-focused coping. Wishful thinking was related to optimism and greater use of positive reinterpretation and growth, an emotion-focused coping response. Next, the new measure was used to distinguish optimists who were wishful thinkers from those who were realistic. An experimental study was conducted to investigate hypothesized differences between wishful thinkers and realistic optimists. In this study, participants were asked to make judgments about their future performance. When success at the task was important to wishful thinkers, they judged success as more likely than when success was not important to them. Realistic optimists did not vary their judgments as a function of importance. The optimal margin of illusion hypothesis was not supported; extreme levels of optimism and wishful thinking were not associated with overconfidence and poor performance. Potential uses of the wishful thinking measure for future research are discussed.