Hindsight Bias (On reflection why do we believe that an unpredictable was predictable?)
The Hindsight bias, a brief explanation
What is the Hindsight Bias?
The hindsight bias is the tendency to reflect back on events with unpredictable outcomes and think that they had predictable outcomes.
Examples
An investor reflecting back on an investment thinking that they knew the unlikely outcome after the stock had already increased in value.
A rugby fan reflecting back on the unlikely outcome of a rugby match and thinking that they knew the ‘underdog’ team would win after a win.
The literature
Biais, B. & Weber, M. (2009). Hindsight bias, risk perception, and investment performance. Management Science, 55(6). Doi: 10.1287/mnsc.1090.1000
Roese, N. J. & Maniar, S. D. (1997). Perceptions of purple: counterfactual and hindsight judgments at Northwestern Wildcats football games. Personality and Social Psychology Bulletin, 23(12). Doi: 10.1177/01461672972312002
drdanedgcumbe.co.uk 