Hindsight bias
The tendency, once the outcome is known, to believe it was predictable, which distorts the judgment passed afterward on an underwriting decision.
Hindsight bias is the tendency to overestimate, after the fact, the probability one would have given an event before it happened. Baruch Fischhoff demonstrated it in 1975: readers told the outcome of a historical episode judged it far more probable than those who had not been told, and believed they would have foreseen it. It threatens every review of a decision. An underwriter whose account had a loss will be judged reckless, another whose identical account was spared will be judged skillful, although the decision was the same and only chance separates them. Judging the quality of a decision therefore requires separating the decision from its outcome, which is possible only if what was known and what was thought were written down beforehand, in an underwriting file note or a dated probability. Without that record, the review learns nothing: it tells a story.
In Fischhoff's experiment published in 1975, students read an account of the 1814 war between the British and the Gurkhas of Nepal. Those given an outcome, whichever it was, judged it markedly more probable than the group given none.
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