Ever say to yourself, “I knew it all along” after hearing news for the very first time? Perhaps news that is suppose to be shocking? This may include situations, such as finding out that a coworker was secretly embezzling company funds, listening to a fourth-quarter comeback that wins the game, seeing the tumor that appeared on a second scan. Scientists refer to this psychological phenomenon as “hindsight bias”- although we didn’t actually know it all along, we certainly felt as though we did.

Pyschological scientists Neal Roese of the Kellogg School of Management at Northwestern University and Kathleen Vohs of the Carlson School of Management at the University of Minnesota examined existing research on this concept, which is one of the most widely studied decision traps that has been recorded in a variety of disciplines, such as athletic competitions, medical diagnoses, political strategy, and accounting and auditing decisions.

The scientists wanted to observe the various factors that make us so vulnerable to this phenomenon while determining what we can do to fight it. Their research, published in Perspectives on Psychological Science is the first report to pull ideas together from different branches of knowledge.

There are 3 levels of hindsight bias that work together, according to Roese and Vohs, from basic memory processes up to higher-level inference and belief, including:

  • memory distortion– misremembering an earlier opinion or judgment (“I said it would happen”)
  • inevitability– focuses on our belief that the event was inevitable (“It had to happen”)
  • foreseeability– involves the belief that we personally could have foreseen the event (“I knew it would happen”)

The experts believe that there are specific factors increasing our likelihood toward hindsight bias. Research has suggested that we selectively recall information that verifies what we know to be true and then we try to generate a story that makes sense out of the datails we have gathered.

When this story is easy to come up with, we believe that we must have foreseen the outcome. This is because, research suggests, we have a desire to see the world as orderly and predictable, while wanting the world to see us in a positive light as well.

Essentially, hindsight bias matters because it alters our learning experiences. “If you feel like you knew it all along, it means you won’t stop to examine why something really happened,” explained Roese. “It’s often hard to convince seasoned decision makers that they might fall prey to hindsight bias.”

We may even become overconfident because of this idea we developed, making us more positive than we should be about our own judgments. For example, studies have shown that overconfident entrepreneurs have a higher chance of taking on high-risk ventures that might result in absolute failure.

Believing that we “knew it all along” may not cause us harm, but it can have serious outcomes for the legal system, particularly in cases of product liability, negligence, and medical malpractice. It often alters judgments about a defendant’s past conduct, according to scientists. For example, a witness may not be 100% accurate because he or she may be influenced by hindsight bias, which can change the way someone’s brain restores and recalls information, making them see the defendant more or less guilty than he is.

Matters may become even worse when technology is involved.

Roese said:

“Paradoxically, the technology that provides us with simplified ways of understanding complex patterns – from financial modeling of mortgage foreclosures to tracking the flow of communications among terrorist networks – may actually increase hindsight bias.”

How can we change this? Roese and Vohs believe that we should consider the opposite in order to get around our cognitive fault in an effective way. When we are trying to explain how an outcome happened that didn’t actually happen, we counteract our usual inclination to throw out information that doesn’t make sense with the story we have. As a result, we may have a slightly different perspective of the the events that are occurring.

Written by Sarah Glynn