The Denver International Airport opened 16 months late, at a cost overrun of $2 billion.¹

The Eurofighter Typhoon, a joint defense project of several European countries, was delivered 54 months late at a cost of $19 billion instead of $7 billion.

The Sydney Opera House may be the most legendary construction overrun of all time, originally estimated to be completed in 1963 for $7 million, and finally completed in 1973 for $102 million.²

Are these isolated disasters brought to our attention by selective availability? Are they symptoms of bureaucracy or government incentive failures? Yes, very probably. But there’s also a corresponding cognitive bias, replicated in experiments with individual planners.

Buehler et al. asked their students for estimates of when they (the students) thought they would complete their personal academic projects.³ Specifically, the researchers asked for estimated times by which the students thought it was 50%, 75%, and 99% probable their personal projects would be done. Would you care to guess how many students finished on or before their estimated 50%, 75%, and 99% probability levels?

13% of subjects finished their project by the time they had assigned a 50% probability level;
19% finished by the time assigned a 75% probability level;
and only 45% (less than half!) finished by the time of their 99% probability level.

As Buehler et al. wrote, “The results for the 99% probability level are especially striking: Even when asked to make a highly conservative forecast, a prediction that they felt virtually certain that they would fulfill, students’ confidence in their time estimates far exceeded their accomplishments.”⁴

More generally, this phenomenon is known as the “planning fallacy.” The planning fallacy is that people think they can plan, ha ha.

A clue to the underlying problem with the planning algorithm was uncovered by Newby-Clark et al., who found that

Asking subjects for their predictions based on realistic “best guess” scenarios; and
Asking subjects for their hoped-for “best case” scenarios . . .

. . . produced indistinguishable results.⁵

When people are asked for a “realistic” scenario, they envision everything going exactly as planned, with no unexpected delays or unforeseen catastrophes—the same vision as their “best case.”

Reality, it turns out, usually delivers results somewhat worse than the “worst case.”

Unlike most cognitive biases, we k...

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