On October 29, 2012 The New York Times published an article titled “That Guy Won? Why We Knew It All Along.”
Amid the many uncertainties of next Tuesday’s presidential election lies one sure thing: Many people will feel in their gut that they knew the result all along. Not only felt it coming, but swear they predicted it beforehand — remember? — and probably more than once…
Most will also have a ready-made argument for why it was inevitable that Mitt Romney, or Barack Obama, won — displaying the sort of false, after-the-fact “foresight” that psychologists call hindsight bias.
Political pundits aren’t the only ones to suffer from hindsight bias.
“The important thing to know about hindsight bias is that it not only changes how you see the world, but also how you see yourself in it,” said Neal Roese, a professor of marketing at the Kellogg School of Management at Northwestern University, who just published a review paper on the bias with Kathleen D. Vohs of the University of Minnesota. “You begin to think: ‘Hey, I’m good. I’m really good at figuring out what’s going to happen.’ You begin to see outcomes as inevitable that were not.”
Investors must be extra careful to remain aware of how hindsight bias might affect their decisions.
Once they know an outcome, people tend to inflate their initial predictions by an average of 15 to 20 percent, Dr. Roese said — ample wiggle room to retrospectively alter almost any prediction from “it’s going to happen” to “it probably won’t,” be it a tennis match, a legal decision or a presidential race.
It’s only natural.
One reason it’s hard to avoid this bias is that it mirrors how the brain operates biologically. The brain cannot possibly make sense of incoming sensory information instantaneously; it continually reconstructs, inserting meaning and making judgments very quickly, but post hoc.
Can we change human behavior?
The solution is contained in the psychological processes that underlie the bias itself, studies suggest. Take the presidential race. It’s a dead heat in the polls, and the fact that so many will argue after the vote that the winner was inevitable implies that they have front-loaded arguments to support both outcomes. One way to counteract the bias is to play out those possibilities before the final outcome.