How the Planning Fallacy Trips You Up
The planning fallacy is a cognitive bias that arises from producing plans that are unrealistically close to best-case scenarios instead of likely ones. We all do this. But why?
Planning fallacy = Underestimated (cost, time, risk) + overestimated (benefits, opportunities)
Psychologists originally defined the “planning fallacy” as the tendency to underestimate task-completion times. The term was coined by Daniel Kahneman and Amos Tversky (1979a: 315)* in their pioneering work in behavioral science to describe the tendency for people to underestimate task-completion times.
The planning fallacy is a cognitive bias that arises from people producing plans that are unrealistically close to best-case scenarios.
In a typical experiment used to document the fallacy, students were asked to estimate the completion time for their year-long honors thesis project. The students’ “realistic” predictions were overly optimistic: 70% took longer than their own estimated time, even though the question was asked toward the end of the year. On average, students…
