Hindsight is 20/20

What is it?

Imagine a situation like this: Bert recently got a new manager, Anna. He is convinced of having a good relationship with her. They have been working together for almost eight months now and everything seems to be going well.

One day after work, Bert receives a short text message from Anna: ‘We need to talk.’ Suddenly, he gets worried. Is everything alright? Did he make a mistake? He noticed some tension between him and her last week, particularly in the team meeting where Bert’s latest project was discussed. In their next 1:1 Anna tells Bert that she was disappointed with his performance in the last months. Bert must definitely improve his communication style and his reliability on made promises. Otherwise, he will be in deep trouble soon.

Damn! He knew it! Now that he looks back at his relationship with his boss, he sees many signs that pointed to trouble: the tonality in the e-mails, the looks he got in the meetings, tasks being re-assigned to others, and so on. He had known it all along, and so this bad news from Anna was no surprise to him. Ever been in such a situation yourself? Then you got to experience the hindsight bias: everything makes sense retrospectively and we think we had known it already back then.

How can this bias influence our decision-making? Well, if we look back at our past decisions and believe that we knew the consequences of them at decision time (when we didn’t), we will overestimate our ability to predict the implications of our future decisions.

The positive effect of the bias is that we rule out mistakes we made in the past and gain some trust and confidence for the future. The negative effect is that we rule out mistakes we made in the past and do the same stupid things again, over and over. Or even worse.

Why does it happen?

It seems that the hindsight bias has at least three underlying causes. In retrospect, the event appears easier to predict than it actually was: “It was obvious that it would happen” (although it was totally unclear at that time). This forms a nice combination with memory distortions and misremembering of our earlier judgment: “I said it would happen” (although I didn’t). And both work wonderfully hand in hand with cognitive dissonance.

The third reason is a certain personal belief about the nature and causality of the world: “I said it would happen, so it had to happen”. If you don’t believe that this kind of thinking exists, just remember that many of us don’t like to talk out loud about threatening things to prevent them from coming true in the end. There is a saying in German which reads directly translated “don’t paint the devil on the wall”. ?

How can we avoid it?

The simplest hack is to write a diary. I have to admit that I don’t take the time to do this, but I started to note down my “fortune telling” attempts, particularly for my most important predictions. I remember that I was perfectly wrong with my bet on Brexit and Trump. With the latter even twice. And this leads to my second life hack to overcome the bias: openly confess your wrong prognoses. One of the reasons that we think our forecasts are better than they are is our fundamental desire to look good in front of ourselves and others. If we get rid of this need and admit our faults, we can fight the negative effect of the hindsight bias and turn it into the question: What can I learn from my mistakes?

What’s your thinking around that?

Does this sound familiar to you? Any own experiences or stories you would like to share? Please start a conversation in the comments section!

#decisionmaking #bias