Delusions of Success: Comment on Dan Lovallo and Daniel Kahneman

TL;DR

This paper comments on Lovallo and Kahneman's analysis of the planning fallacy, emphasizing the importance of deliberate bias in forecasting that they overlooked, and discusses implications for decision-making.

Contribution

It highlights a missing factor—deliberate forecast manipulation—in the existing analysis of optimism bias in forecasting.

Findings

Acknowledges the value of Lovallo and Kahneman's causes and cures for the planning fallacy

Identifies deliberate forecast 'cooking' as an overlooked bias in forecasting

Suggests incorporating deliberate bias considerations into decision-making processes

Abstract

Dan Lovallo and Daniel Kahneman must be commended for their clear identification of causes and cures to the planning fallacy in "Delusions of Success: How Optimism Undermines Executives' Decisions" (HBR July 2003). Their look at overoptimism, anchoring, competitor neglect, and the outside view in forecasting is highly useful to executives and forecasters. However, Lovallo and Kahneman underrate one source of bias in forecasting - the deliberate "cooking" of forecasts to get ventures started.