Why do we always believe we could have predicted the outcome of an event once we know it?

The hindsight overconfidence bias refers to the phenomenon of believing that we could have predicted the outcome of an event as if we knew it all along, and it can be explained by both motivational and cognitive explanations.

 

Post hoc overconfidence bias refers to the phenomenon that after knowing the outcome of an event, we believe that we could have predicted the outcome from the beginning. A key component of this bias is believing that you could have predicted something that happened around you, when in fact you could not have predicted it. Historical events that could be explained by chance are often interpreted as inevitable once the outcome is known. This bias leads people to think, ‘I knew it was going to happen from the beginning.
Explanations for the occurrence of hindsight overconfidence bias are divided into synchronous and cognitive explanations. The first is related to the search for a sense of control. A sense of control is defined as “the belief that one can understand and explain events around oneself, and that one can predict future events”. Another motivational explanation is that the hindsight overconfidence bias is driven by the motivation to confirm this sense of control. People are motivated to see themselves as competent enough to predict the outcome of an event, so the ex post overconfidence bias occurs.
The cognitive explanation, also known as “latent determinism,” has received stronger support than the motivational explanation. In this theory, the outcome of an event “infiltrates” people’s mental representations, meaning that once the outcome is known, information about the outcome is immediately and automatically incorporated into their representations. This new representation changes the causal model of antecedent events and possible outcomes, strengthening the causal relationship between the given outcome and the antecedent event, but weakening the causal relationship between the outcome and the antecedent event. As a result, in the postmortem representation, only the outcome that occurred is present, and the other possible outcomes are absent. As a result, there is little thinking about other outcomes, and only thinking about the outcome that occurred.
According to this cognitive explanation, once the outcome of an event is known, people try to explain why it happened, and the easier it is to come up with such an explanation, the stronger the posterior overconfidence. Causal reasoning is deeply involved in the development of ex post overconfidence, and the size of ex post overconfidence is determined by the ease of ex post explanations.
Hindsight overconfidence bias has the potential to distort the accuracy and quality of judgment and decision making. As such, it has been recognized as an important bias in judgment and decision making and is known to be very difficult to reduce. Currently, there is a lot of research on how it can be reduced. In particular, psychologists are exploring ways to reduce this bias through education and training. For example, by asking people to predict the outcome of an event before they are told the outcome, or by asking them to consider different possibilities.
In addition, hindsight overconfidence bias has important implications not only for individuals but also for organizations. When executives fall prey to hindsight overconfidence bias, they are more likely to make poor decisions, which can negatively impact a company’s performance. Therefore, efforts should be made to recognize and reduce this bias at the organizational level. To do this, it’s important to gather diverse opinions during the decision-making process and use objective data when analyzing the results.
Hindsight overconfidence bias is a common phenomenon in everyday life. Whether it’s a sporting event, the stock market, or a political event, people often act as if they knew the outcome all along. To reduce this bias, you need to be able to reflect on yourself and objectively evaluate how accurate your past judgments were. This will help you recognize the hindsight overconfidence bias and allow you to make more careful and objective judgments.
The hindsight overconfidence bias is an important example of human cognitive limitations. Recognizing and reducing this bias is important not only for personal growth, but also for organizational development. Through continued research and education, we will continue to find ways to overcome the hindsight bias and make better judgments and decisions.