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Cognitive Biases

Failing a Test

Kahneman’s team learned that comparable curriculum projects took far longer than they had expected. They recognized the problem but kept going without discussing a new forecast, partly because of sunk costs and the embarrassment of stopping.

THE IDEA

FAILING A TEST

While developing a curriculum, our team learned from my friend Seymour that similar projects took much longer than we had expected. For many years, I thought that the main point of this story was what I had learned about Seymour: that his best guess about the future of our project was not informed by what he knew about similar projects. I came off quite well in my telling of the story, in which I had the role of clever questioner and astute psychologist. I only recently realized that I had actually played the roles of chief dunce and inept leader.

The project was my initiative, and it was therefore my responsibility to ensure that it made sense and that major problems were properly discussed by the team, but I failed that test. My problem was no longer the planning fallacy. I was cured of that fallacy as soon as I heard Seymour’s statistical summary. If pressed, I would have said that our earlier estimates had been absurdly optimistic. If pressed further, I would have admitted that we had started the project on faulty premises and that we should at least consider seriously the option of declaring defeat and going home. But nobody pressed me and there was no discussion; we tacitly agreed to go on without an explicit forecast of how long the effort would last. This was easy to do because we had not made such a forecast to begin with. If we had had a reasonable baseline prediction when we started, we would not have gone into it, but we had already invested a great deal of effort—an instance of the sunk-cost fallacy. It would have been embarrassing for us—especially for me—to give up at that point, and there seemed to be no immediate reason to do so. It is easier to change directions in a crisis, but this was not a crisis, only some new facts about people we did not know. The outside view was much easier to ignore than bad news in our own effort. I can best describe our state as a form of lethargy—an unwillingness to think about what had happened. So we carried on. There was no further attempt at rational planning for the rest of the time I spent as a member of the team—a particularly troubling omission for a team dedicated to teaching rationality. I hope I am wiser today, and I have acquired a habit of looking for the outside view. But it will never be the natural thing to do.

When to use it

  • Deciding whether to continue investing in a failing business venture.

  • Evaluating a long-term software project that has gone over budget.

  • Assessing the viability of a research project after initial results are disappointing.

  • Choosing to abandon or pivot a product that is not gaining traction.

FROM THEORY TO EVERYDAY LIFE

In practice

01

The Curriculum Project

The author recounts a personal experience where he led a team developing a curriculum. Despite receiving statistical evidence from a colleague that similar projects took much longer than expected, the team continued the project due to the sunk-cost fallacy and a lack of open discussion, illustrating how difficult it is to apply the outside view and abandon a failing course of action.

✳

A MOMENT TO REFLECT

Put it to work.

  1. How can you ensure that you consider outside view statistics when planning a project?

  2. What signs indicate that you are falling prey to the sunk-cost fallacy in a decision?

  3. In what ways might group dynamics prevent a team from discussing uncomfortable truths about a failing project?

Connected ideas

Another lens can bring the same problem into focus.

CONTINUE THE CONVERSATION

Source texts

  • Thinking, Fast and Slow (Daniel Kahneman)
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