Unconscious bias permeates every corner of society, from the world of business to home life, and it takes many different forms – one of which is ‘hindsight bias’.
Though some people may not be aware of the phrase, they have most likely encountered an example of it coming into play, according to a new study by psychological scientists at Northwestern University and the University of Minnesota in the US.
It is the act of a person claiming they “knew it all along” after being represented with a piece of particularly striking or newsworthy information.
Whereas most people will have been guilty at some point of pretending to know more about a situation then they actually do, the experts explain that people with so-called ‘hindsight bias’ will have convinced themselves that they really did know what was going on – even if the truth is the opposite.
In research published in the journal Perspectives on Psychological Science, Professor Neal Roese from Northwestern’s Kellogg School and Kathleen Vohs from the Carlson School of Management at the University of Minnesota reviewed existing research on hindsight bias.
They explored the factors that make people so susceptible to this phenomenon and aimed to identify methods of combating it by drawing together insights and techniques from across different disciplines.
The experts determined that there are three levels of hindsight bias, which begins with basic memory processes and ends with higher-level inference and belief.
The first level – memory distortion – is misremembering an earlier opinion or judgment, while the second level – inevitability – is centered on a person’s belief that the event was bound to happen.
The third level – termed ‘foreseeability’ by the researchers – is the belief that the individual personally could have foreseen the event and knew it would happen.
According to the experts, certain factors fuel people’s tendency to display hindsight bias, as they selectively recall information that confirms what they know to be true and also try to create a narrative that makes sense out of the information they have.
As such, when this narrative is easy to generate, they interpret that to mean that the outcome must have been foreseeable.
In addition, the experts suggest that people have a need for closure that motivates them to see the world as orderly and predictable and to do whatever they can to promote a positive view of themselves – regardless of the consequences.
The problem with that, as Professor Roese argues, is that hindsight bias gets in the way of people learning from their experiences – a vital trait in life.
“If you feel like you knew it all along, it means you won’t stop to examine why something really happened. It’s often hard to convince seasoned decision makers that they might fall prey to hindsight bias,” he explained.
The phenomenon is very much present in the world of business, with overconfident entrepreneurs more likely to take on risky, ill-informed ventures that fail to produce a significant return on investment – while the situation becomes even worse when applied to the legal or financial arenas.
As Professor Roese notes: “Paradoxically, the technology that provides us with simplified ways of understanding complex patterns – from financial modelling of mortgage foreclosures to tracking the flow of communications among terrorist networks – may actually increase hindsight bias.”
The solution, the specialists argue, may be to consider the opposite, as this can provide people with a means of getting around their cognitive fault.
When people are encouraged to consider and explain how and why certain plans did not come to fruition, they need to counteract their usual inclination to discard information that does not fit with the narrative.
The result is that people may be able to reach a more realistic and balanced perspective of the causal chain of events and learn from their experiences.
Until this hindsight bias is recognised and addressed, people and businesses will continue to make the same mistakes.
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