The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.
That is, it does seem that we are all virtuoso novelists, who find ourselves engaged in all sorts of behavior, more or less unified, but sometimes disunified, and we always put the best "faces" on it we can. We try to make all of our material cohere into a single good story. And that story is our autobiography.
They are unable to provide (and likely fail to generate internally) a narrative account of their experiences, wishes, and actions, although they are fully cognizant of their visual, auditory, and tactile surroundings. These individuals lead "denarrated" lives, aware but failing to organize experience in an action generating temporal frame. In the extreme, they do not speak unless spoken to and do not move unless very hungry. These patients illustrate the inseparable connection between narrativity and personhood. Brain injured individuals may lose their linguistic, mathematic, syllogistic, visuospatial, mnestic, or kinesthetic competencies and still be recognizably the same persons. Individuals who have lost the ability to construct narrative, however,have lost their selves.
There are ways to escape the narrative fallacy...by making conjectures and running experiments, by making testable predictions.
That is probably the reason why The Hero's Journey is so popular in novels and movies.
I also think that one should consider when it's actually worth overriding the narrative fallacy. I would say that it depends on
The likelihood that the narrative is misleading (depending on the source of the story and how much we are fooled by the confirmation bias and wishful thinking)
The importance of the question at hand
No use in making the effort of slow thinking if the narrative is already true or the outcome is irrelevant.