Hindsight Bias

The tendency to overestimate our knowledge at the time of an event, after the fact, particularly with unpredictable events.

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Key Insights & Principles

Decision Making

1. Hindsight bias can lead to overconfidence in our predictive abilities, leading to poor decision making or risk taking.
2. We tend to assess the quality of decisions not by whether the process of making the decision at the time was sound, but by the outcome.
3. Everything seems inevitable in retrospect.

1. Keep a journal: write predictions, and review against actual outcomes.
2. Use lessons learned from past mistakes and focus on what can be done with the information available now.

Management

1. Managers tend to recognise hindsight bias in others but not themselves.
2. Hindsight bias can be destructive in teams when we negatively judge people for not knowing the unknowable.

1. Encourage reasonable risk taking by rewarding decision making within the context of the information available at the time of the decision.

Book References