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Summary on Planning Fallacy: some hidden details

First proposed by Daniel Kahneman along with Amos Tversky in 1979, the planning fallacy appears to be a phenomenon, where predictions about how much time is going to be required to complete a future task display an optimism bias and also underestimate the time needed.

The given phenomenon takes place regardless of the individual's knowledge, which past tasks of a similar nature have taken more time to complete than initially planned. The bias only impacts predictions regarding one's own assignments, when outside observers foresee task completion times, they usually offer a pessimistic scenario, thus overestimating the time required.

The planning fallacy suggests that forecasts of current tasks' completion times turn to be more optimistic compared to the beliefs as for past completion times for similar projects and also that forecasts of the current tasks' completion times happen to be more optimistic than the actual time required to complete the tasks.

In 2003, Kahneman and Lovallo proposed an expanded definition as the tendency to underestimate the time, risks and costs of future actions and simultaneously overestimate the benefits of the same actions. As this definition states, the planning fallacy results in not only time overruns, but it also takes into account cost overruns along with benefit shortfalls.

For individual tasks

In a 1994 research, up to 37 psychology learners were asked to assess how long it would take to complete their senior theses. The average assessment was 33.9 days. Beds this, they estimated how long it would take on the condition everything went as well as it probably could, and if everything went as bad as it probably could. In this case, the average actual completion time was 55.5 days, with only about 30% of the learners completing their thesis in the amount of time they forecast.

Another study asked learners to estimate when they would finish their personal academic projects. Specifically, those conducting the research asked for estimated times by which the learners thought it was 50%, 75% as well as 99% probable their personal projects would be accomplished.

The research offers the following figures:

  • Approximately 13% of subjects completed their project by the time they had assigned and it was a 50% probability level;
  • About 19% completed by the time assigned and it was a 75% probability level;
  • Up to 45% coped with the task by the time of their forecast and it was a 99% probability level.

First proposed by Daniel Kahneman along with Amos Tversky in 1979, the planning fallacy appears to be a phenomenon, where predictions about how much time is going to be required to complete a future task display an optimism bias and also underestimate the time needed.

Assignment ID
100002738
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CREATED ON
15 November 2016
COMPLETED ON
17 November 2016
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$31
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