That is, small losses feel worse than an equally small gain feels good.
But even if someone could estimate their tax liability without error, it's not necessarily irrational for someone to build in a tax refund at year-end rather than take those same dollars and spread them out (as additional pay) throughout the year.
For an imperfect analogy, assume you lend someone $1,000. They then offer to pay you back $20 per week for 50 weeks, or $1,000 at the end of the 50th week. Economically, it makes more sense to take $20 per week because the payments are accelerated. But someone may feel that they would hardly notice $20 per week (drip, drip, drip), and would rather get paid all at once ... even if it means delaying the payment for a year.
I'm not saying that's what I do. I'm just saying I wouldn't say someone else was doing it wrong if they had that preference.