You’re a project manager overseeing five teams that are developing a new app. Each team must complete their work by July 1 in order to release the app by the end of the year. Based on your work managing the project, you know that each team has about a 75% chance of meeting the deadline.

a. At your weekly status meeting, the CEO turns to you and says, “Give me your gut reaction: What are the chances we actually get this done by the end of the year?” How do you answer?

b. Now work out the answer with a calculator. You can either multiply 0.75 five times or raise 0.75 to the power of five. Was your estimate correct, too high, or too low? What aspect of behavioral economics could explain your gut reaction?