Overestimating

Overestimating is a cognitive bias in which a person assigns a higher value to a quantity, ability, outcome, or probability than is warranted by evidence. As a form of estimation error, it can affect judgments about personal abilities, task duration, financial performance, risk, and demand for products or services. Overestimation may be conscious or unconscious and often coexists with other biases such as optimism bias or confirmation bias. Causes include limited information, motivational factors, miscalibration of probability, the influence of vivid experiences (availability heuristic), anchoring to favorable assumptions, and neglect of base rates or uncertainty.

Examples include overestimating how long a task will take, overprojecting future revenue, or overestimating the likelihood of rare events. The consequences can be costly: project delays or overruns, budget shortfalls, unsafe risk assessment, or poor strategic choices.

Measurement of overestimation often involves calibration studies in which individuals judge probabilities or scales and are compared with actual outcomes. High levels of overestimation indicate poor calibration and can be optimized via training.

Mitigation strategies include explicit uncertainty ranges, probabilistic reasoning, checking estimates against base rates, decomposing problems into smaller parts, using reference class comparisons, seeking independent estimates, and conducting pre-mortems or scenario planning to stress-test assumptions.

See also optimism bias, estimation, planning fallacy, and cognitive biases. Understanding overestimation involves integrating statistics, decision theory, and psychology to improve judgment under uncertainty.