While he was waiting, he googled fun facts about the Opera to impress her. This was what he had found on Wikipedia:<\/span><\/p>\n \u201cSydney Opera House was originally scheduled for four years, with a budget of AUS $7 million. It ended up taking 14 years to be completed and cost AUS $102 million.\u201d<\/span><\/i><\/p>\n \u201cThat\u2019s so cool!\u201d he thought. She said the same after hearing it. They have used the same phrase in the following months a lot, so they decided to get married. (She liked his fun facts and he liked her for being late\u200a\u2014\u200aso he had enough time to find them.)<\/span><\/p>\n His stubborn mother who had divorced his father warned him that there\u2019s a 33% to 50% chance of them getting a divorce. \u201cNot us, mother. We love each other very much.\u201d \u201cSure, because your father and I got married out of hatred.\u201d<\/span><\/p>\n They had gotten married anyway and had done better than some marriages. <\/span><\/p>\n \u201cNothing will ever separate us. We will probably be married another ten years.\u201d\u200a\u2014\u200aElizabeth Taylor, five days before she and Richard Burton had announced their divorce.<\/span><\/i><\/p>\n But worse than most marriages. To be exact, worse than 67% to 50% of them.<\/span><\/p>\n The wedding present she got was a box where she could store her makeup. As a result, she stopped being late; so the guy didn\u2019t have time to find the fun facts. And who wants to be in a marriage where the best fun fact is the prediction of your divorce?<\/span><\/p>\n \u201cNot me!\u201d she grabbed the box and threw it on the floor. Both the box and the marriage fell apart that day.<\/span><\/p>\n <\/p>\n The Planning Fallacy<\/b><\/p>\n People are late, projects cost millions instead of thousands, wars take years instead of months, and why my mom always comes home with a bag full of groceries, no matter what she intended to buy? It\u2019s the planning fallacy!<\/span><\/p>\n The concept of the planning fallacy was first introduced by Nobel Laureate Daniel Kahneman and his colleague Amos Tversky. It describes overly optimistic plans and forecasts that\u00a0<\/span>are unrealistically close to best-case scenarios <\/span>could be improved by consulting the statistics of similar cases.<\/span><\/p>\n In his book, Thinking, Fast and Slow, Kahneman describes the following forecasting story. He and his colleagues were designing a textbook to teach judgment and decision making in high school. After meeting once a week for a year, they\u2019ve already made some progress: wrote a couple of chapters, constructed an outline of a syllabus and had run a few sample lessons. <\/span><\/p>\n They were just discussing how to estimate uncertain quantities, so Kahneman proposed that everyone wrote down their estimates of duration before finishing the textbook. The results were centered around two years. <\/span><\/p>\n Then Kahneman turned to the curriculum expert (both estimated the same as others) and asked him: \u201cHow long does it usually take to construct a curriculum?\u201d <\/span><\/p>\n \u201cSeven to ten years. Not to mention almost half of the groups gave up before,\u201d he replied. <\/span><\/p>\n Kahneman dug further: \u201cHow good are we compared to other groups?\u201d <\/span><\/p>\n \u201cSlightly below the average,\u201d said the curriculum expert. A moment later, he raised his eyebrows, realizing the contradiction in his estimates. How can below average group outpace others by more than three years? \u00a0\u00a0<\/span><\/p>\n It can, but it\u2019s foolish assuming it will. <\/span><\/p>\n The difference occurred because he used two different planning strategies. When writing down his estimate, he searched for information <\/span>inside<\/span><\/i> his mind, trying to envision the future. Later, with Kahneman\u2019s help, he based the prediction on the statistics of similar situations from the <\/span>outside <\/span><\/i>world. \u00a0<\/span><\/p>\n <\/p>\n The Inside View<\/b><\/p>\n It\u2019s a strategy where the group members wrote down their estimates. The strategy focuses on our specific circumstances and searches for evidence in our experiences. It\u2019s extrapolating\u200a\u2014\u200aassuming that existing trends will continue. There\u2019s one problem:<\/span><\/p>\n \u201cThe future ain\u2019t what it used to be.\u201c\u200a\u2014\u200aYogi Berra<\/span><\/i><\/p>\n \u201cThe reason for [too optimistic forecasts] is that we underestimate uncertainty by compressing the range of possible uncertain states (by reducing the space of the unknown),\u201d explains Nassim Nicholas Taleb \u00a0in his bestseller The Black Swan. In other words, we underestimate what we don\u2019t know. In Kahneman\u2019s situation, these could be more complex chapters, illnesses, bureaucracy problems\u2026 Hundreds of things one cannot even imagine. <\/span><\/p>\n \u201cUnexpected always pushes in a single direction: higher costs and a longer time to completion.\u201d\u200a\u2014\u200aNassim Nicholas Taleb<\/span><\/i><\/p>\n The longer, more complex and unique the task is, the harder the prediction. Think about the most basic one, getting up out of a chair. You can predict when you are going to stand up in case you don\u2019t want to sit anymore\u200a\u2014\u200aexcept if your friends like to play pranks with a glue. <\/span><\/p>\n On the opposite side, there are wars. Each war has its own properties: people, terrain, weather, tactics, technologies. They usually last multiple years (although predicted less). And more time means more opportunities for unexpected to struck. Would Japan attack the USA if they could predict their development of the nuclear weapons?<\/span><\/p>\n Even nowadays war predictions fail miserably. The Bush administration underestimated Iraq War expenses by more than 30-fold; current expenses are around $2 trillion (initial $60 billion) and growing.<\/span><\/p>\n If there\u2019s a lesson to be learned from the inside view, it\u2019s Hofstadter\u2019s Law:<\/span><\/p>\n \u201cIt always takes longer than you expect, even if you take Hofstadter\u2019s Law into account.\u201c\u200a\u2014\u200aDouglas Hofstadter<\/span><\/i><\/p>\n <\/p>\n The Outside View<\/b><\/p>\n Using statistical information from the similar projects is the cure to the planning fallacy. On average, you will face the same amount of unexpected troubles as other people.<\/span><\/p>\n The method called reference class forecasting was proposed by Flyvbjerg. It contains three steps to which I added the practical examples from Kahnemann\u2019s story:<\/span><\/p>\n Identify an appropriate reference class:<\/b><\/p>\n other curriculum projects.<\/span><\/p>\n Obtain the statistics of the reference class and generate a baseline prediction:<\/b><\/p>\n seven to ten and 40% failure rate.<\/span><\/p>\n Use specific information about the case to adjust the baseline prediction<\/b>: is there any evidence that our group is better or worse than others?<\/span><\/p>\n Kahneman\u2019s group finished the project in eight years, close to the fastest ones. <\/span><\/p>\n In those years, many things have changed: he wasn\u2019t part of the group anymore and there wasn\u2019t much interest in teaching decision making. The textbook has never made it to the schools\u2019 benches. <\/span><\/p>\n In some cases, we already use the outside view to some extent. Think about lifespan prediction. It\u2019s typical to use the average lifespan and add or subtract a couple of years based on the lifestyle, genetics and health situation. One doesn\u2019t look at their own experience and declare: \u201cI\u2019m feeling well and I haven\u2019t died yet, based on this evidence I\u2019m going to live forever.\u201d<\/span><\/p>\n <\/p>\n The Optimism Bias<\/b><\/p>\n There\u2019s one more bias responsible for the planning fallacy; the optimism bias. It\u2019s summarized in the following quote:<\/span><\/p>\n \u201cMost of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they likely to be.\u201d\u200a\u2014\u200aDaniel Kahneman<\/span><\/i><\/p>\n We perceive events asymmetrically. We attribute successes to our skills and our failures to bad luck. But only for ourselves and people closely related to us, not the other human beings\u200a\u2014\u200athis creates illusory superiority. <\/span><\/p>\n Researchers found out that 90% of drivers think they are better than the average driver, and most students think they are more intelligent than the average student. Following this logic, why wouldn\u2019t we be the ones who will succeed? <\/span><\/p>\n Because everyone thinks they\u2019re a little special but that makes no one special. <\/span><\/p>\n \u201cHave you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?\u201d\u200a\u2014\u200aGeorge Carlin<\/span><\/i><\/p>\n The newly single guy went out for a beer to cure his broken heart. He wanted to gain back his optimism (bias, but he wouldn\u2019t admit that). When he switched to shots, he overshot. Instead of optimism about the future, he gained sorrow for the past. The phone was in his hands before friends could stop him (they were busy checking their phones).<\/span><\/p>\n \u201ci miz u;D\u201d was the message which started to glue together the broken marriage. (She was asleep so she didn\u2019t respond immediately\u200a\u2014\u200aand we all know who liked to wait.)<\/span><\/p>\n However, they didn\u2019t need to glue together the makeup box. He bought it as a sign of their reborn love\u200a\u2014\u200ait was the thing that made her say \u2018that\u2019s so cool\u2019 again. <\/span><\/p>\n And in their case, \u2018oh, so cool\u2019 wasn\u2019t far away from saying \u2018I do\u2019.<\/span><\/p>\n They planned, God laughed.<\/span><\/p>\n <\/p>\n
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