Systematic tendency to underestimate how long tasks will take and what can go wrong, despite past experience with similar projects.
People make optimistic predictions about their own projects while correctly predicting that similar projects by others will face delays and problems. This occurs because we focus on the specific plan (inside view) rather than the statistical distribution of outcomes for similar projects (outside view). The planning fallacy combines optimism bias, anchoring on best-case scenarios, and failure to consider what typically goes wrong. Even experienced professionals fall victim when planning their own projects.
A software team estimates a project will take three months based on their plan, ignoring that their last five projects took twice as long as estimated. They focus on their specific plan rather than the base rate of past performance.
Detailed planning prevents delays—detailed plans often increase confidence without improving accuracy, because they don't account for unknown unknowns.
Why do people make optimistic predictions about their own projects while correctly predicting delays in similar projects by others?
How does the planning fallacy relate to the 'Plateau of Latent Potential' concept from Atomic Habits?
Logically equivalent choices produce different decisions when framed differently (as gains vs. losses, or with different reference points).
PrincipleContinuing an endeavor because of previously invested resources (time, money, effort) that cannot be recovered, even when continuing is irrational.
PrincipleFast, automatic, unconscious cognitive processing that operates through pattern recognition and associative memory without deliberate effort.
Mental ModelSlow, effortful, conscious cognitive processing required for complex calculations, unfamiliar tasks, and deliberate reasoning.
Mental ModelThe tendency to rely too heavily on the first piece of information encountered (the anchor) when making decisions, even when it's arbitrary or irrelevant.
PrincipleJudging the frequency or probability of events by how easily examples come to mind, leading to overestimation of vivid, recent, or emotional events.
PrincipleJudging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
PrincipleWhen faced with a difficult question, System 1 automatically substitutes an easier question without conscious awareness of the switch.
FrameworkSystematic tendency to underestimate how long tasks will take and what can go wrong, despite past experience with similar projects.
A software team estimates a project will take three months based on their plan, ignoring that their last five projects took twice as long as estimated. They focus on their specific plan rather than the base rate of past performance.
Detailed planning prevents delays—detailed plans often increase confidence without improving accuracy, because they don't account for unknown unknowns.
Planning Fallacy is explored in depth in "Thinking, Fast and Slow" by Daniel Kahneman. Distilo provides a deep AI-powered analysis with key insights, audio narration, and practical frameworks.