Aug 27, 2021
Today’s episode is all about
hindsight bias. You have probably heard the phrase “Hindsight is
20/20” and maybe even said it yourself on occasion. Well, I hate to
burst your bubble, but this simply isn’t true.
We humans have a hindsight bias
that makes us believe we knew something “all along” when reflecting
back on an incident, and this can cause all sorts of problems when
making future decisions. I will cover this throughout today’s
episode as well as tips for how to combat hindsight bias so it has
less of an impact on you.
- [00:07] Today’s behavioral
economics foundations episode is about hindsight bias.
- [02:21] When we think about our
brains and all the amazing things they do, much of what we are
accessing are memories.
- [02:47] Our memories are
basically inaccurate renditions our brains tell us and every time
we access them, we change them a little. So, the more you think
about something, the less and less it is like the original
- [03:28] Memories get further
and further from the truth as time goes on, especially for those
memories which are recalled again and again.
- [04:20] Even reading about an
event in history, which feels as though it must be fully accurate,
is missing details and important pieces that people didn’t even
think to include or pay attention to.
- [06:01] In reflecting back on
an event the brain will assume it has all the information on: what
happened, why, and assume that it knows what to infer from that for
the next time you encounter a situation like this. The problem, of
course, is that you don’t have all the information.
- [08:32] Once the results are in
it is easy to say you knew it, and it makes your overconfident,
optimistic brain feel good about itself.
- [09:20] Our brains don’t like
to have a misalignment in what we believe to be true. Your brain
believes that you are smarter, better, faster, stronger than
everyone else (including you 5 minutes ago). So, when something
happens differently than you predicted, it looks for ways to
resolve that discomfort (that dissonance) by reasoning that you
“knew it all along” even when you didn’t – or often couldn’t have
- [10:12] One simple way I combat
hindsight bias when doing presentations is by making people commit
to an answer or instinct before sharing what the real answer
- [11:36] If I didn’t make people
say their answers out loud, commit to something in the moment in a
semi-public way, even if they sort of thought of something in their
head when I asked, they don’t feel committed and when the reveal
came, they would not be as surprised. They would think something
like, “Yeah, that makes sense. I was tossing around some numbers
close to that” or whatever.
- [12:03] Saying their own
numbers aloud and watching how far off the entire group is as
everyone commits in the moment when I reveal just a few seconds
later – is very powerful in getting this concept to stick in the
- [13:33] Tip #1: Be comfortable
admitting you don’t know or are surprised.
- [14:17] When you admit that you
were surprised by something or that you didn’t know the answer, it
allows you to ask why.
- [14:40] Tip #2: Writing things
down ahead of the result.
- [15:15] If you have a decision
diary or evaluation notebook or whatever you feel like calling it
(whether it is handwritten or virtual) you can keep track of those
thoughts in advance and reflect upon them to keep your hindsight
bias in check when the results are in. And remember of course that
your insights are only as good as the notes you take.
- [17:03] It doesn’t really
matter what you choose, just get into the habit of writing those
suspicions or ideas down upfront and how you came to the conclusion
– so you can evaluate it properly in a post mortem and learn about
your own decisions and flaws in your decision-making process that
you can learn from in the future.
- [17:27] Tip #3: Review what
happened, thinking through other outcomes that could have happened,
and what would have made that be the case. Ask questions like, “How
easily could things have been different?” or “What information
might I be missing or overlooking?”
- [18:44] Bonus Tip #4: Don’t put
too much weight on finding the exact answer and using it as a
general rule of thumb for all similar decisions moving forward.
- [21:11] The Brainy Business was
nominated for the best market research podcast of 2021. Vote for
The Brainy Business
here by August
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