Overestimating can be costly too. That's why bluffing can work, in poker as in war.
Examples/articles:
100 horsemen and the empty city (gated). Here are two articles summarizing the original paper: Miami SBA and ScienceDaily
The most important decisions are before starting a war, and there the mistakes have very different costs. Overestimating your enemy results in peace (or cold war) which basically means that you just lose out on some opportunistic conquests but underestimating your enemy results in a bloody, unexpectedly long war that can disrupt you for a decade or more - there are many nice examples of that in 20th century history.
Another month, another rationality quotes thread. The rules are: