The task of managing software projects is universally plagued by cost and schedule overruns. A fundamental problem in software projects is the presence of unreliable information. In initial information as well as in subsequent status reports. The authors report an experiment that investigates decision making in software projects as exemplars of complex, dynamic environments reactive to the actions of the decision maker. The experiment shows that in coping with unreliable information in such environments, decision makers are susceptible to self-fulfilling prophesies created by the environment, and are prone to demonstrate conservatism. A process tracing extension of the experiment shows that subjects demonstrate a low capacity for handling complexity. The implications of the results for managing software projects and for research in dynamic decision making are discussed.
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