Planning Fallacy

Daniel Kahneman and Amos Tversky gave the error its name, and in Thinking, Fast and Slow Kahneman tells how he fell into it himself. He was leading a team writing a curriculum and a textbook, and when each member wrote down how long the work would take, the estimates clustered around a couple of years. He then asked the most experienced member how long similar teams had needed. The answer, which the man had never thought to apply to his own team, was sobering: a large share of such teams never finished, and those that did took far longer than this team expected. The team carried on, and the book was finished years later than planned. The mechanism is the inside view. We picture this project, its steps and our intentions, and an imagined sequence leaves out the illnesses, approvals and surprises that fill real calendars. Optimism, and the wish to get a plan approved, do the rest. The cure Kahneman recommends is the outside view, which, following the planning researcher Bent Flyvbjerg, he calls reference-class forecasting: find a class of similar projects, start from their actual record, and adjust only for what is truly different. Gary Klein's premortem then adds the failures the plan never imagined.