Optimism Bias in Managing IT Project Risks: a Construal Level Theory Perspective

Prior research has shown that people have a tendency to be overly optimistic about future events (i.e., optimism bias) in a variety of settings. In this study, we suggest that optimism bias has significant implications for IT project risk management, as it may cause people to become overly optimistic that they can easily manage project risks. Drawing upon construal level theory (CLT), we investigate optimism bias in managing IT project risks. Based on an experiment with IT professionals, we found that a high-level construal of a project risk leads individuals to have a more optimistic perception about successfully managing the project risk, causes them to focus more on benefits over costs in choosing a risk management plan, and leads them to identify more pros than cons associated with a risk management plan relative to a low-level construal. Implications for both theory and practice are discussed.