what is hindsight bias 
hindsight bias is a psychological phenomenon that allows people to convince themselves after an event that they accurately predicted it before it happened this can lead people to conclude that they can accurately predict other events hindsight bias is studied in behavioral economics because it is a common failing of individual investors understanding hindsight biashindsight bias is when a person looks back at an event and believes they predicted the outcome even if they failed to act on that prediction unfortunately this leads people to think that their judgment is better than it is the idea is that once we know the outcome it s much easier to construct a plausible explanation with this we become less critical of our decisions leading to poor decision making in the future hindsight bias is caused by1the bias occurs when we remember something we believe we predicted and view it at the present time as an inevitable event we knew would happen investors often feel pressure to perfectly time buying or selling stocks to maximize their returns when they suffer a loss they regret not acting earlier with regret comes the thought that they saw it coming all along in fact it was one of the many possibilities that they might have anticipated whichever one of them pans out the investor becomes convinced that they saw it coming this allows them to make poor decisions in the future unknowingly preventing hindsight bias involves being able to make predictions beforehand such as keeping a decision making journal allowing the investor to compare later keeping an investment journal or diary may allow investors to avoid some issues tied to hindsight bias 