2. Mental Models
Overview
Occurs when we look back in time and see events are more predictable than they were at the time a decision was made. This bias, also known as the “knew-it-all-along effect”
What happens when we change idea? A lot of psychologist studied the phenomenon. One experiment goes like this: they carefully measure people’s reactions to some controversial topics, like death penalty. Then they see or hear a persuasive message pro or against death penalty and they measure again, usually the opinions shift more towards agreeing with the message. At last, the test subjects try to remember the opinion before the shift, which reveals hard. Most don’t even believe they ever thought it differently.
This bias has devastating effects on valuations on decision makers. Induces observers to value the quality of a decision not on the fact that the decisional process is ok, but if the result is good or bad.
The combining of result bias and the hindsight bias obtain undeserved rewards to lovers of danger. Leaders having fortune to their side have been never punished for taking too many risks.