Hindsight bias is our tendency to look back at unpredictable events and think it was easily predictable. It is also called the ‘knew-it-all-along’ effect.

The hindsight bias can have a negative influence on our decision-making, as part of what helps us make good decisions is realistically assessing the consequences of our decisions. This bias can lead to overconfidence in our prediction ability. This can be bad, as overconfidence may lead us to take unnecessary risks.

According to Neal Roese and Kathleen Vohs, there are three levels that this occurs: memory distortion, a belief that a past event was inevitable or that it was foreseeable. So, the bias occurs when we misremember our past thoughts, think a past event was inevitable, and subsequently, believe the event was foreseeable.

KEY TAKEAWAYS

Reflection is key to recognising hindsight bias. Our memories can be deceptive, it can take a lot of dissecting to figure out if you really did ‘know it all along’ or if you are just exhibiting hindsight bias. Maybe an event wasn’t as inevitable as you now think it was, imagine all the other ways that the scenario might have played out. Instead of assuming that you have incredible foresight, is there some other lesson you could learn from that event?

LINKS

Elections, sporting matches, the share market are all areas where we exhibit hindsight bias. Did you really call the last election correctly, or were you like 20% of college students in one study and exhibited hindsight bias. It’s easy to do, and hard to recognise in ourselves.

To learn about the fallibility of our memory check out ‘Remember’ by Lisa Genova.

WHAT TO DO?

Keeping track of your decisions, and your reasoning behind them is the easiest way to avoid hindsight bias. It will help you accurately reflect on your decision making process and to learn from your mistakes.

IN OUR NEXT EPISODE...

In our next episode we explore the impact of base rate neglect.

For more episodes and information about decision making head over to our website: https://goodbetterright.com.au/podcast/

Tessa Mudge and Ken Smith