Hindsight Bias
This is a preview of a concept contained in The Personal MBA by Josh Kaufman, a book that will help you master the fundamentals of business, hone your business instincts, and save a fortune in tuition. The Personal MBA distills the most powerful principles of business and delivers them quickly and concisely. Order your copy now…
What is “Hindsight Bias”?
“Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be encumbered with your old nonsense.” — Ralph Waldo Emerson, essayist and poet
Key Points:
- Hindsight Bias is the tendency to kick yourself for things “you should have known.”
- Every decision you’ll ever make will be lacking some information. That’s why we use Interpretation to fill in the blanks.
- It’s important to realize that the feeling of “feeling stupid” for not predicting an outcome is irrational, and that there’s nothing you can do to go back and change it.
- Hindsight Bias becomes destructive if you judge yourself or other for not knowing the unknowable.
- Reinterpret your past mistakes in a positive way, focus on what’s ahead.
Questions for Consideration:
- Do you still feel bad about something that happened in the past?
- How does your understanding of sunk cost and hindsight bias change the way you think about that situation?
- Is there anything that you can to improve the situation instead of continuing to feel bad?
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