What Is The Planning Fallacy In Behavioral Economics?

The planning fallacy is a phenomenon in which people have a tendency to underestimate the amount of time, resources, or effort that will be required to complete a task or project. This can happen when people base their estimates on optimistic or unrealistic assumptions, and may lead them to make inadequate or inappropriate plans. For example, if you are planning a trip, you may underestimate the amount of time it will take to get to your destination, or the amount of money you will need to spend on food and lodging. The planning fallacy can lead to errors in judgment and decision-making, as it can cause people to underestimate the resources that are needed to complete a task, or to be unprepared for delays or unexpected events. To avoid the planning fallacy, it is important to carefully evaluate the potential risks and challenges of a task or project, and to make realistic and conservative estimates of the time, resources, and effort that will be required to complete it.

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