Planning Fallacy

The planning fallacy is a cognitive bias that may lead entrepreneurs to underestimate the time or resources needed to complete tasks, resulting in overly optimistic predictions. This bias was first discussed by Daniel Kahneman and Amos Tversky, who argued that decision makers often focus on internal or controllable factors when making these predictions. A key component of this bias is that, in spite of knowing that predicted completion times tend to be overly optimistic, individuals focus on specific elements of the task, discounting the likelihood of external or unexpected delays. Entrepreneurs might be more susceptible to this bias, given their optimistic perceptions of risk as well as situational pressures commonly found with new ventures. Although strategies such as breaking projects into smaller pieces when making ...