Kahneman delves into the planning fallacy, where people consistently underestimate costs and time while overestimating benefits. He emphasizes using the 'outside view' by looking at statistical data from similar projects to create more accurate predictions. 'Executives too easily fall victim to the planning fallacy... they make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities.' This approach urges decision-makers to consider historical data for realistic planning. | Daniel Kahneman | Thinking, Fast and Slow

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The Planning Fallacy

Kahneman delves into the planning fallacy, where people consistently underestimate costs and time while overestimating benefits. He emphasizes using the 'outside view' by looking at statistical data from similar projects to create more accurate predictions. 'Executives too easily fall victim to the planning fallacy... they make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities.' This approach urges decision-makers to consider historical data for realistic planning.

-- Daniel Kahneman