Decision Making
A hindsight bias causes individuals to overestimate the quality of decisions that had positive outcomes and underestimate the quality of decisions that had negative outcomes. If a student quits a prestigious university and ends up founding a multi-billion dollar company this decision may appear to be far more intelligent than it actually was at the time. If an employee quits a startup that goes on to make all of its early employees extremely wealth, this decision may be viewed as more irrational than it actually was given the information available to the employee at the time.Justice
Hindsight bias can work against the defense in a trial as a judge and jury may view negative outcomes as more obvious and preventable than they actually were at the time of an incident. For example, a defendant who is charged with involuntary manslaughter may have had only a few seconds to prevent an accident that was their fault. With the benefit of hindsight, a jury may overestimate the neglect that occurred during this timeframe.Innovation
A tendency to view the innovations of the past as less inventive and more obvious than they were at the time. For example, a film with innovative cinematography that wows audiences of its day may be viewed by future audiences as nothing special because the technique may be copied by a large number of films with time.Knew it All Along
It is common for people to overestimate their foreknowledge of an event. For example, a stock trader may think that a crash is coming at least once a week for 9 years. When a crash does finally occur, the trader may believe that they knew it. This is a common phenomenon that can cause overconfidence as an individual may begin to overestimate their talent, insight or perhaps start to believe that they can predict the future with some accuracy.Chronological Snobbery
Chronological snobbery is the view that people of the past were irrational and ignorant. This is influenced by hindsight bias as the decisions of the past may appear to be foolish when there were reasonable at the time given their historical context.| Overview: Hindsight Bias | ||
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Definition | A common tendency to view the past as more predictable than it was at the time. | |
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