Phil_Goetz comments on Planning Fallacy - Less Wrong

41 Post author: Eliezer_Yudkowsky 17 September 2007 07:06AM

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Comment author: Phil_Goetz 23 August 2008 09:50:23PM 2 points [-]

I always find it strange that, every year, the US Congress passes a budget that assumes that nothing will go wrong over the next year. Every long-range budget plan also assumes that nothing will go wrong. (On the flip side, they also assume that nothing will go right: Planning for health care assumes that investment in health research will have no effect.)

The estimate you would like to have for a project is the investment needed to complete it in the average case. But humans don't think in terms of averages; they think in terms of typicality. They are drawn to the mode of a distribution rather than to its mean.

When distributions are symmetric, this isn't a problem. But in planning, the distribution of time or cost to completion is bounded below by zero, and hence not symmetric. The average value will be much larger than the modal value.