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The Principle of the Malevolent Hiding Hand; or, the Planning Fallacy Writ Large


  • Bent Flyvbjerg
  • Cass R. Sunstein


We identify and document a new principle of economic behavior: the principle of the Malevolent Hiding Hand. In a famous discussion, Albert Hirschman celebrated the Hiding Hand, which he saw as a benevolent mechanism by which unrealistically optimistic planners embark on unexpectedly challenging plans, only to be rescued by human ingenuity, which they could not anticipate, but which ultimately led to success, principally in the form of unexpectedly high net benefits. Studying eleven projects, Hirschman suggested that the Hiding Hand is a general phenomenon. But the Benevolent Hiding Hand has an evil twin, the Malevolent Hiding Hand, which blinds excessively optimistic planners not only to unexpectedly high costs but also to unexpectedly low net benefits. Studying a much larger sample than Hirschman did, we find that the Malevolent Hiding Hand is common and that the phenomenon that Hirschman identified is rare. This sobering finding suggests that Hirschman's phenomenon is a special case; it attests to the pervasiveness of the planning fallacy, writ very large. One implication involves the continuing need for unbiased cost-benefit analyses and other economic decision support tools; another is that such tools might sometimes prove unreliable.

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  • Bent Flyvbjerg & Cass R. Sunstein, 2015. "The Principle of the Malevolent Hiding Hand; or, the Planning Fallacy Writ Large," Papers 1509.01526,
  • Handle: RePEc:arx:papers:1509.01526

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    References listed on IDEAS

    1. Flyvbjerg, Bent, 2005. "Measuring inaccuracy in travel demand forecasting: methodological considerations regarding ramp up and sampling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(6), pages 522-530, July.
    2. Ansar, Atif & Flyvbjerg, Bent & Budzier, Alexander & Lunn, Daniel, 2014. "Should we build more large dams? The actual costs of hydropower megaproject development," Energy Policy, Elsevier, vol. 69(C), pages 43-56.
    3. Bent Flyvbjerg, 2009. "Survival of the unfittest: why the worst infrastructure gets built--and what we can do about it," Oxford Review of Economic Policy, Oxford University Press, vol. 25(3), pages 344-367, Autumn.
    4. Alacevich, Michele, 2014. "Visualizing Uncertainties, Or How Albert Hirschman And The World Bank Disagreed On Project Appraisal And What This Says About The End Of €Œhigh Development Theoryâ€," Journal of the History of Economic Thought, Cambridge University Press, vol. 36(2), pages 137-168, June.
    5. Ana Maria Bianchi, 2011. "Albert Hirschman and his controversial research report," Working Papers, Department of Economics 2011_03, University of São Paulo (FEA-USP).
    6. Bent Flyvbjerg, 2013. "Quality Control and Due Diligence in Project Management: Getting Decisions Right by Taking the Outside View," Papers 1302.2544,
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    Cited by:

    1. Flyvbjerg, Bent, 2018. "Planning Fallacy or Hiding Hand: Which is the Better Explanation?," World Development, Elsevier, vol. 103(C), pages 383-386.
    2. Portugal-Pereira, J. & Ferreira, P. & Cunha, J. & Szklo, A. & Schaeffer, R. & Araújo, M., 2018. "Better late than never, but never late is better: Risk assessment of nuclear power construction projects," Energy Policy, Elsevier, vol. 120(C), pages 158-166.
    3. Ika, Lavagnon A., 2018. "Beneficial or Detrimental Ignorance: The Straw Man Fallacy of Flyvbjerg’s Test of Hirschman’s Hiding Hand," World Development, Elsevier, vol. 103(C), pages 369-382.
    4. Atif Ansar & Bent Flyvbjerg & Alexander Budzier & Daniel Lunn, 2016. "Does infrastructure investment lead to economic growth or economic fragility? Evidence from China," Oxford Review of Economic Policy, Oxford University Press, vol. 32(3), pages 360-390.
    5. Lepenies, Philipp H., 2018. "Statistical Tests as a Hindrance to Understanding," World Development, Elsevier, vol. 103(C), pages 360-365.

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