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This study empirically tackles the question of whether taking an outside‐view approach, recommended for reducing the irrational behaviours associated with the planning fallacy, can also reduce the time underestimation, scope overload and over‐requirement problems plaguing planning decisions in software development. Drawing on descriptive behavioural decision theory, this study examines whether the planning fallacy, a cognitive bias referring to the tendency of people to underestimate costs and overestimate benefits in evaluating a task to be performed, can provide a theoretical platform for mitigating irrational behaviours in the planning of software development projects. In particular, we argue that taking an outside‐view approach in planning decisions for software development may have the same mitigating effects on time underestimation, scope overload and over‐requirement it has been shown to have on cost underestimation and benefit overestimation. In an experiment investigating this argument, participants were randomly assigned to four groups by manipulating two outside‐view mechanisms: reference information about past completion times (present/absent) and role perspective (developer/consultant). After being presented with a to‐be‐developed software project, they were requested to estimate development times of various software features and to recommend which features to include within project scope given a fixed duration for the entire project. The results confirm that the three problems of time underestimation, scope overload and over‐requirement are manifested in planning decisions for fixed‐schedule software development projects. Moreover, the results show that these problems are mitigated, yet not eliminated, by presenting reference information about past completion times and by having a consultant role.

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