What does the planning fallacy refer to in psychology?

The planning fallacy refers to the tendency for individuals to underestimate the time, costs, and risks of future actions while overestimating the benefits of those actions. It highlights a cognitive bias where people assume that their projects will proceed as planned, ignoring historical data that suggests they often take longer than expected. This phenomenon occurs even when individuals have past experiences that contradict their optimism about the time required for similar tasks.

Understanding the planning fallacy is essential for improving personal and professional project management. By recognizing this bias, individuals can take proactive steps, such as building in more time for tasks based on previous experiences, to create more realistic plans and avoid the pitfalls of miscalculation.