Summary: Hindsight bias is the inclination to see events that have occurred as being more predictable than they were before they took place. Hindsight bias has been demonstrated experimentally in a variety of settings, including politics, games and medicine. In psychological experiments of hindsight bias, subjects also tend to remember their predictions of future events as having been stronger than they actually were, in those cases where those predictions turn out correct. This inaccurate assessment of reality after it has occurred is also referred to as “creeping determinism”.

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Not the same old hindsight bias: outcome information distorts a broad range of retrospective judgments

The hindsight bias (e.g., Fischhoff, 1975) illustrates that outcome information can make people believe that they would have (or did) predict an outcome that they would not (or did not) actually predict. In two experiments, participants (N = 226) made a prediction immediately before receiving outcome information. Therefore, participants could not distort or misremember their predictions to make them align with the outcome information. In both experiments, participants distorted their reports of how certain they recalled having been in their prediction, how good of a basis they had for making the prediction, how long they took to make the prediction, and so forth. Experiment 2 showed that these effects were diminished when participants engaged in private thought about the upcoming questions prior to receiving outcome information, suggesting that the effect is not due to impression management concerns.

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Why Hindsight Can Damage Foresight

In 1972, President Richard Nixon made a historic trip to China, which had become virtually a closed country following the 1949 revolution. There was intense speculation on what Nixon might achieve. In a now-famous study, Baruch Fischhoff and Ruth Beyth (1975) asked their students to estimate probabilities for events relating to his visit. An example: “The USA will establish a permanent diplomatic mission in Peking, but not grant diplomatic recognition.”

The students were not told that, after the visit had been concluded (and widely reported), they would be asked to recall their estimated probabilities. The study found that if an event had occurred, most believed they had assigned it a higher probability than was actually the case. When an event had not occurred, the opposite was true. This is hindsight bias: the tendency to believe that our forecasts were more accurate than they were. In retrospect, things often appear to be much more predictable than at the time of our forecast. The credit crunch, the Democratic victory in 2008, and the recent success of my favourite soccer team – all now seem inevitable, with the benefit of hindsight.

Why should forecasters, eyeing the future, fear hindsight bias? Because hindsight bias makes us believe we’re better forecasters than we really are, and that the world’s a much more predictable place than it really is. Hindsight bias can hinder our learning from our past forecasting errors, hence limiting the extent to which we can improve our forecasting skills through experience.

Researchers continue to investigate the nature and implications of hindsight bias and ways to reduce its impact. On one database, I counted 46 papers on the topic, published in the last two years alone.

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