1.7 – Hindsight Bias
What is the Hindsight Bias?
The hindsight bias is our tendency to look back at an unpredictable event and think it was easily predictable. It is also called the ‘knew it all along’ effect.
Where THIS bias occurs
Consider this hypothetical: John and Jane have a fantastic relationship. They are madly in love and have plans to move in together in a few months — at least that’s what John thinks.
One day after work, John receives a message from Jane: ‘We need to talk.’ Suddenly, he gets worried. Is everything alright? Does Jane still love him? He did notice some tension between them the last few weeks. It turns out that Jane is not so happy with the relationship. She needs a break from John.
He knew it! John tells himself, and then his friends. Now that he looks back at his relationship with Jane, he saw many signs that pointed to trouble: canceled plans, awkwardness, being ignored by her friends, and so forth. He had known it all along, and so this bad news from Jane was no surprise to him.
This is the hindsight bias at work. An unforeseen break-up becomes foreseeable to John after it takes place. He overestimates his ability to have predicted the end of his relationship with Jane once the relationship is suddenly over.
Individual effects
The hindsight bias can have a negative influence on our decision-making. Part of what goes into making good decisions is realistically assessing their consequences. It can lead to overconfidence in our ability to predict these consequences. Overconfidence bias occurs when individuals overestimate their ability to predict future events. If we look back at past decisions and conclude that their consequences were indeed known to us at the time (when they weren’t), then it makes sense that we will overestimate our ability to foresee the implications of our future decisions. This can be dangerous, as our overconfidence may lead us to take unnecessary risks.1 Think of a gambler who looks back at past losses as predictable, making him increasingly confident that his next trip to the casino will be successful.
Systemic effects
Hindsight bias can have troubling implications across different academic and professional areas. The accurate study of past historical and political events or trends may be tainted if researchers are unable to put themselves in the shoes of decision-makers at the time ― whose decisions were not informed by the foresight we have studying them in retrospect. This can cause details that seem obvious after the fact to be overlooked. Law, insurance, and finance all rely on realistic risk assessments based on similar past events. The bias can distort these predictions.
Why HINDSIGHT BIAS happens
The hindsight bias happens when new information surrounding a past experience changes our recollection of that experience from an original thought into something different.2 According to psychological scientists Neal Roese and Kathleen Vohs, there are three stacking levels on which this can occu