Before the invasion, you could find numerous articles supporting the premise that WMDs were there.Īfter the war, not so much. That’s when many journalists really changed their tune. However, after the invasion, none were found. claimed to have evidence of weapons of mass destruction (WMD). There are certainly plenty of wars to choose from, one of the most recent was the invasion of Iraq. If you are looking for controversy, then this example is right for you. If they had known, they would not have gone through with the business plan. When that happens, you can observe a lot of hindsight bias in action.įor example, some of the decision-makers may complain that they didn’t have enough information about a competitor’s product. If the product fails, the company will have lost a lot of money and wasted a lot of resources. The company may have spent millions of dollars in R&D for a new product, and once a decision is made to introduce it to the market, more money will be spent on advertising. Introducing New Productsīusiness decisions regarding product lines can involve putting a lot on the line. Whether it comes from ourselves or our circle of good friends, feeling that we knew it all along can make us feel just a tiny bit better. When things go sour and the inevitable heartbreak unfolds, we can rely on our trusty friend the hindsight bias. In the beginning of a relationship, our judgment can be clouded by hope and hormones. Unfortunately, when it comes to relationships, finding the right one can involve going through a long list of “not the right one.” This is just part of the journey. “I knew he was trouble,” or “I tried to tell you she was bad news,” are words we have all heard before. Claiming that you knew it all along is a way to be right, even when you were wrong. If the recent hire works out well, then the HR guru will conclude “My gut told me they were right for the job.” On the other side of the coin, if the person didn’t work out, the HR manager might say “Well, I had a bad feeling about that person all along.”Įither way, the blow of making a bad decision can be softened by using the hindsight bias. You just never know.Īfter three months on the job, the person hired may be great, or, they may be a complete train-wreck. Lots of resumes may look good and many candidates can perform well in an interview.īut at the end of the day, it is still a gamble. The HR department of any company faces the tough task of hiring. Of course, statements like that are not going to make anyone feel good, except for the person that said it. The first words out of the mouth of some might very well be, “I knew it was going to go down.” Many opinions are expressed, some for and some against certain stocks.Īfter the team has selected a few stocks to invest in, then spent a couple of million to buy a bunch of shares, if one fails, you will likely see a range of reactions, including the hindsight bias. For example, there may be a group meeting to discuss potential buys.
#HINDSIGHT BIAS PSYCHOLOGY DEFINITION PROFESSIONAL#
It is no wonder that people in this profession have a lot of stress.Īs in other industries, professional stock brokers also exhibit hindsight bias.
It can be a real blow to one’s confidence and bank account. Predicting the Stock Marketīeing wrong about stocks can be devastating. Examples exist for trivial events, such as if it will rain or not, to significant historical events involving economics and wars. Hindsight bias is so prevalent you can see it happen nearly every day. No one likes to look bad, so saying that we knew something was going to happen helps restore our self-esteem. This is a way of restoring cohesion to a world that is sometimes unstable. Hindsight bias is a cognitive bias that occurs when people overestimate their ability to predict outcomes, after the fact.įor example, although someone may make a prediction, when that prediction fails to materialize, they are likely to say that they “knew it all along.”
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