Reference Class Forecasting

People forecast from the inside view, building an estimate from their own plan's details, which invites optimism and the planning fallacy. This skill replaces that with the outside view: find a reference class of similar past cases, take the base-rate distribution of how they actually turned out, and anchor the forecast on that, adjusting only cautiously for genuine specifics. The output is a reference-class estimate. The honest constraint: it requires real base-rate data; inventing a distribution is worse than admitting uncertainty.

When to Use

• Forecasting cost, time, or odds of success for something with comparable precedents.
• The inside-view estimate is likely optimistic.
• High-stakes commitments prone to the planning fallacy.

When NOT to Use

• Genuinely novel undertakings with no comparable reference class.
• When you have no real base-rate data and would have to invent it.
• When the specifics genuinely dominate and no class is comparable.
• When a point certainty is expected (this produces a distribution).

Instructions