What is Planning Fallacy?
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What is Planning Fallacy?


A phenomenon known as the planning fallacy occurs when one who estimates the amount of time required to do a task in the future, exhibits optimism bias. The term planning fallacy describes a prediction phenomenon that many people are all too acquainted with: people underestimate how long a task will take to complete in the future, even when they are aware that such activities have typically taken longer than anticipated in the past. The planning fallacy usually occurs when we rely only on the inside view, which is when we ignore outside data regarding our chances of success and instead rely on our gut feelings about how expensive a project will be.

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Reasons Behind Planning Fallacy

1. We would rather emphasize the good:

The planning fallacy is a result of our Intrinsic tendency to be optimistic, particularly about our capabilities. We tend to be positive people overall. We tend to recall good things rather than bad ones, we have upbeat expectations for the world and other people, and—most importantly—we choose positive information when making decisions.

2. We get fixed on our initial strategy:

Another cognitive bias that contributes significantly to the planning mistake is anchoring. Anchoring is when people rely too much on the first information they receive, even if it’s unrelated, influencing their decisions by anchoring them to that initial data. We tend to think about those original values—budgets, timelines, and so on—while creating a project plan. If our initial plans were overly optimistic, anchoring becomes particularly difficult. We feel bound to those figures even when we attempt to reevaluate, even if our initial projections were wildly off.

Read More: Cognitive Biases in Everyday Life

3. Negative information is dismissed:

Even when we do consider external information, we often ignore evidence or gloomy opinions that contradict our optimistic perspective. This is the opposite of our positivity bias: we are hesitant to weigh the drawbacks since we prefer to think about positive information. One term for this in the business sector is competitor neglect, which refers to the inability of executives of companies to predict the actions of their rivals since they are preoccupied with running their businesses. For instance, when a business chooses to enter a rapidly expanding market, it frequently overlooks the possibility that its rivals would follow suit, underestimating the risk.

4. We experience societal pressure:

One important factor contributing to the planning fallacy’s potentially harmful effects is organizational pressure to complete projects on time and without incident. Workplace cultures are frequently quite competitive, and people who express less enthusiasm for a project or who need a longer deadline than others may incur costs. Executives may, however, give preference to the most wildly optimistic forecasts over others, encouraging people to make erroneous decisions based only on intuition.

Read More: The Psychology Behind Risk-Taking

How to Avoid Planning Fallacy?

The planning error cannot be prevented by only being aware of it. Even with this understanding, we run the risk of making the mistake of thinking that the rules won’t apply to us this time. Even if our gut has previously made incorrect predictions, the majority of us much prefer to trust our instincts. Planning around the planning fallacy and including preventative measures in the process are the best things we can do.

1. Consider the exterior scene:

We employ distributional information and single information as two types of information while planning. Evidence about the particular instance under review is known as singular information, whereas evidence about comparable tasks accomplished in the past is known as distributional information. These viewpoints are also known as the outside view and the interior view, respectively.

Read More: How Does Overthinking Impact Our Decision-Making Power?

2. Decide on implementation goals:

One further way to counter the planning fallacy is demonstrated by a Dutch study in which participants were assigned a writing project and instructed to do it in one week. Two groups of participants were formed. Goal intentions were given to both groups, with instructions to state the day they planned to begin writing the paper and the day they thought they would finish.

But the second group also provided guidelines for how they were to be implemented, including what time of day and where they were to write. They were instructed to picture themselves carrying out their strategy. Additionally, they reported less disruptions to their work. This could be a result of strengthening one’s resolve to stick to one’s strategy after carefully considering how to accomplish the current task. These findings demonstrate that, when paired with a well-considered plan, optimism and realism are not mutually exclusive.

Read More: 4 Tips to Set High-Achieving Goals

3. For improved estimations, utilize the segmentation effect:

A comparable tactic is to deconstruct large projects into their constituent elements and then schedule the completion of the individual smaller tasks rather than the project as a whole. Research indicates that while humans are not very good at anticipating the amount of time needed for relatively major projects, we are considerably better at preparing for smaller ones. Most of the time, our predictions for minor jobs are amazingly accurate, or at least, overestimated. Thus, this is a far safer course of action. In actuality, it’s far preferable to estimate a project’s time requirements as too high rather than too low.

Summing up

With its roots in everyday life and experience, the planning fallacy is a phenomenon that has kept our research group occupied for almost two decades. While the planning fallacy was examined in this chapter about task completion predictions, we have also found that people tend to overestimate the intensity and duration of their love relationships, exhibiting comparable patterns and psychological processes. The planning fallacy is a common occurrence that can have an impact on everything from small-scale undertakings to major construction projects in our lives. It’s critical to be realistic and take project setbacks and hurdles into consideration to avoid the planning fallacy.

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