Hindsight Bias
Hindsight Bias is first and foremost a cognitive bias.
Now what is a cognitive bias?
Cognitive bias is a systematic error in making judgments and thinking that occurs when people are processing and interpreting information in the world around them that affects the decisions that they make. Cognitive biases are often a result of your brain’s attempt to simplify information processing
We would like to believe we are objective and rational, and generally make good decisions in our lives. Unfortunately, this is not always true, we are all prone to using heuristics and having cognitive biases which lead us to make irrational and incorrect decisions.
In this article we will look at Hindsight Bias. Let’s find out what it is and how it affects us.
Hindsight bias
I have heard of many cases where couples talk about how they, “knew it all along” that the person they married was “the one”. Maybe they are right, and they always knew, or maybe they are indulging in a bit of hindsight bias.
Hindsight bias is the tendency, after an event has occurred, to overestimate the extent to which the outcome could have been predicted. It is also called the ‘knew-it-all-along’ effect.
Why
Firstly we selectively remember information that confirms what we already know to be true. For instance in the above case couples may be selectively remembering their honeymoon phase, and happy moments, and not the hard times, compromises, etc. they would have had to make.
Secondly, people may confuse their ease in understanding an event to its likelihood to happen. An example may be friends of the aforementioned couple also assert they also “knew it all along”. It could be, because they know their friends and how important marriage was to them. This knowledge makes them certain that it is an understanding they had before.
Thirdly, the thought that the world is orderly and somehow predictable is a comfortable one. This comfort motivates us to see unpredictable events as predictable.
Lastly, It feels good to think that you “knew it all along” even if you might not have.
Situation
Blaming victims – Research suggests that hindsight bias contributes to victim derogation in rape cases. Part of the reason why hindsight bias arises, is that we often look for “shortcuts” or the easiest explanations and predictions in order to quickly make sense of the world. It is easy to focus on an individual and their actions. While it is comparatively difficult to mull over the nuances, and layers of systemic causes. This may be why sexual assault victims or ‘survivors’ are often blamed using the rationale, ‘they should have known better’ in retrospect.
Sports fans – in sports fans of certain teams will always want to believe that the team they support will win. One team will of course win and often fans of that team will say “I knew they were going to win”
Business professional: In one survey researchers surveyed 705 entrepreneurs from failed startups. When asked before the faliure 77 of them believed in the startup. But after the startup failed, only 58 said they had originally believed their startup would be a success.
It can happen in situations like investors believe they know how a stock will perform. Leading to them feeling either elated or frustrated depending on how it actually performs.
This Bias, clouds judgments and impairs our ability to learn from the past. We start believing that we can predict events, with greater certainty than reality. This disconnect, causes frustration, anger, leading to poorly thought out decisions.
Overcome this Bias
One strategy is to consider and explain how the outcomes that did not unfold could have unfolded. By mentally reviewing all the potential outcomes, an event will seem less inevitable and foreseeable.
Another way of addressing the dangerous overconfidence that hindsight bias can result in, is to keep track of your past decisions and their associated predictions. If you write down and create a record of your predictions associated with your decisions, eventually you will surely see some false predictions. The mistake of thinking you “knew it all along” can then be prevented.
We have taken a look at how “Hindsight Bias” affects us. But, there are many more biases that can overwhelm our rational thought processes. So read on to other biases to make more intentional and informed choices.
References
Hindsight Bias https://www.investopedia.com/terms/h/hindsight-bias.asp
McKinsey & Company. Debiasing the corporation: An interview with Nobel laureate Richard Thaler https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/debiasing-the-corporation-an-interview-with-nobel-laureate-richard-thaler#
How Hindsight Bias Affects How We View the Past, https://www.verywellmind.com/what-is-a-hindsight-bias-2795236
Why do we see unpredictable events as predictable after they occur? https://thedecisionlab.com/biases/hindsight-bias/
Hindsight Bias: Why You Make Terrible Life Choices https://www.nirandfar.com/hindsight-bias/