The planning fallacy
The planning fallacy refers to a prediction phenomenon, all too familiar to many, wherein people underestimate the time it will take to complete a future task, despite knowledge that previous tasks have generally taken longer than planned. In this chapter, we review theory and research on the planning fallacy, with an emphasis on a programmatic series of investigations that we have conducted on this topic. We first outline a definition of the planning fallacy, explicate controversies and complexities surrounding its definition, and summarize empirical research documenting the scope and generality of the phenomenon. We then explore the origins of the planning fallacy, beginning with the classic inside–outside cognitive model developed by Kahneman and Tversky [Kahneman, D., & Tversky, A. (1979). Intuitive prediction: biases and corrective procedures. TIMS Studies in Management Science, 12, 313–327]. Finally, we develop an extended inside–outside model that integrates empirical research examining cognitive, motivational, social, and behavioral processes underlying the planning fallacy.”
From The Planning Fallacy: Cognitive, Motivational, and Social Origins by Buehler et al. A few snips of interest from the paper:
“3.1. The inside versus outside view
Given the prevalence of optimistic predictions, and ample empirical evidence of the planning fallacy, we now turn to examining the psychological mechanisms that underlie people’s optimistic forecasts. In particular, how do people segregate their general theories about their predictions (i.e., that they are usually unrealistically optimistic) from their specific expectations for an upcoming task? Kahneman and Tversky (1979) explained the prediction failure of the curriculum development team through the inside versus outside analysis of the planning fallacy. This analysis builds upon a perceptual metaphor of how people view a planned project. In the curriculum development example, the group of authors focused on the specific qualities of the current task, and seemed to look inside their representation of the developing project to assess its difficulty. The group of authors failed, however, to look outside of the specific project to evaluate the relevant distribution of comparable projects. Even when they asked for information about the outside viewpoint, they neglected to incorporate it in their predictions or even to moderate their confidence. An inside or internal view of a task focuses on singular information: specific aspects of the target task that might lead to longer or shorter completion times. An outside or external view of the task focuses on distributional information: how the current task fits into the set of related tasks. Thus, the two general approaches to prediction differ primarily in whether individuals treat the target task as a unique case or as an instance of a category or ensemble of similar problems. [...]
We suggest that people often make attributions that diminish the relevance of past experiences to their current task. People are probably most inclined to deny the significance of their personal history when they dislike its implications (e.g., that a project will take longer than they hope). If they are reminded of a past episode that could challenge their optimistic plans, they may invoke attributions that render the experience uninformative for the present forecast. This analysis is consistent with evidence that individuals are inclined to explain away negative personal outcomes (for reviews, see Miller & Ross, 1975; Taylor & Brown, 1988). People’s use of others’ experiences are presumably restricted by the same two factors: a focus on the future reduces the salience of others’ experiences, and the tendency to attribute others’ outcomes to their dispositions (Gilbert & Malone, 1995) limits the inferential value of others’ experiences. Furthermore, our understanding of other people’s experiences is typically associated with uncertainty about what actually happened; consequently, we can readily cast doubt on the generalizability of those experiences. To quote Douglas Adams, ‘‘Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.’’ (Adams & Carwardine, 1991, p. 116) In sum, we note three particular impediments to using the outside perspective in estimating task completion times: the forward nature of prediction which elicits a focus on future scenarios, the elusive definition of ‘‘similar’’ experiences, and attributional processes that diminish the relevance of the past to the present.
3.3. Optimistic plans
People’s completion estimates are likely to be overly optimistic if their forecasts are based exclusively on plan-based, future scenarios. A problem with the scenario approach is that people generally fail to appreciate the vast number of ways in which the future may unfold (Arkes et al., 1988; Fischhoff et al., 1978; Hoch, 1985; Shaklee & Fischhoff, 1982). For instance, expert auto mechanics typically consider only a small subset of the possible things that can go wrong with a car, and hence underestimate the probability of a breakdown (Fischhoff et al., 1978). Similarly, when individuals imagine the future, they often fail to entertain alternatives to their favored scenario and do not consider the implications of the uncertainty inherent in every detail of a constructed scenario (Griffin et al., 1990; Hoch, 1985). When individuals are asked to predict based on ‘‘best guess’’ scenarios, their forecasts are generally indistinguishable from those generated by ‘‘best-case’’ scenarios (Griffin et al., 1990; Newby-Clark et al., 2000). The act of scenario construction itself may lead people to exaggerate the likelihood of the scenario unfolding as envisioned. Individuals instructed to imagine hypothetical outcomes for events ranging from football games to presidential elections subsequently regard these imagined events as more likely (for reviews, see Gregory & Duran, 2001; Koehler, 1991). Focusing on the target event (the successful completion of a set of plans) may lead a predictor to ignore or underweight the chances that some other event will occur. Even when a particular scenario is relatively probable, a priori, chance will still usually favor the whole set of possible alternative events because there are so many (Dawes, 1988; Kahneman & Lovallo, 1993).”
The paper has a lot more stuff and details.