From Daniel Kahneman’s “Thinking, fast and slow”
What is Hindsight Bias?
- “The tendency to revise the history of one’s beliefs in light of what actually happened produces a robust cognitive illusion.” (p. 203)
- “A general limitation of the human mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed. Once you adopt a new view of the world (or of any part of it), you immediately lose much of your ability to recall what you used to believe before your mind changed.” (p. 202)
- “Your inability to reconstruct past beliefs will inevitably cause you to underestimate the extent to which you were surprised by past events.” (p. 202)
Examples of Hindsight Bias:
- Participants were asked to give their opinion about the death penalty. The experimenter recorded their opinions.
Next the participants listened to a persuasive pro or con message about the death penalty. The experimenter asked the participants their opinion about the death penalty again. Usually their opinion closely matched the persuasive message.
Finally, participants were asked if they could remember what their original opinion was.
“Finally, the participants report the opinion they held beforehand. This task turns out to be surprisingly difficult. Asked to reconstruct their former beliefs, people retrieve their current ones instead—an instance of substitution—and many cannot believe that they ever felt differently.” (p. 202) - Nixon planned to visit Mao in China. Participants were given a survey. The survey consists of 15 possible political outcomes that could result from Nixon’s visit to China. The participants were asked to assign probabilities for each outcome.
After Nixon returned to America, the participants were asked to recall what they wrote down as probabilities on the original survey.
“If an event had actually occurred, people exaggerated the probability that they had assigned to it earlier. If the possible event had not come to pass, the participants erroneously recalled that they had always considered it unlikely.” (p. 203) - “Further experiments showed that people were driven to overstate the accuracy not only of their original predictions but also of those made by others. Similar results have been found for other events that gripped public attention, such as the O. J. Simpson murder trial and the impeachment of President Bill Clinton. The tendency to revise the history of one’s beliefs in light of what actually happened produces a robust cognitive illusion.” (p. 203)
Other good quotes about Hindsight Bias:
“Hindsight is especially unkind to decision makers who act as agents for others—physicians, financial advisers, third-base coaches, CEOs, social workers, diplomats, politicians. We are prone to blame decision makers for good decisions that worked out badly and to give them too little credit for successful moves that appear obvious only after the fact. There is a clear outcome bias.”
“When the outcomes are bad, the clients often blame their agents for not seeing the handwriting on the wall—forgetting that it was written in invisible ink that became legible only afterward. Actions that seemed prudent in foresight can look irresponsibly negligent in hindsight.” (p. 203)
“Hindsight bias has pernicious effects on the evaluations of decision makers. It leads observers to assess the quality of a decision not by whether the process was sound but by whether its outcome was good or bad.” (p. 203)
“Although hindsight and the outcome bias generally foster risk aversion, they also bring undeserved rewards to irresponsible risk seekers, such as a general or an entrepreneur who took a crazy gamble and won. Leaders who have been lucky are never punished for having taken too much risk. Instead, they are believed to have had the flair and foresight to anticipate success, and the sensible people who doubted them are seen in hindsight as mediocre, timid, and weak. A few lucky gambles can crown a reckless leader with a halo of prescience and boldness.” (p. 204)