The effects of disappointment on hindsight bias for real‐world outcomes

Abstract

Examined the effects of motivated processing on hindsight bias. One hundred fifty three college students estimated and later recalled the likelihood that 30 self-relevant events would occur during the next 2 months. Multi-level modelling was used to determine the (within-subject) effects of expectations, event valence and event controllability on hindsight bias and the extent to which these effects were moderated by participants' need for cognition (NFC) scores (between-subjects). For events that actually occurred, we found support for defensive processing in that the bias was smaller for negative events. Also, for events that actually occurred, those judged as more controllable produced a larger bias. Neither valence nor controllability had any effect on the size of the bias for events that did not occur. The size of the bias for occurrences did not differ significantly from that for non-occurrences. Finally, NFC did not moderate the effects of valence or controllability, nor did it directly affect the size of the bias.

Controllability and hindsight components: Understanding opposite hindsight biases for self-relevant negative event outcomes

“…This suggests that the opposite effects observed in previous studies were probably driven by the different hindsight components, rather than by any differences in the controllability of the event outcomes in question. Supporting this interpretation, Pezzo and Beckstead (2008) found no effect of event controllability on their foreseeability-related measure of hindsight bias.…”

“…Instead of believing in hindsight that they knew this all along, as a strictly cognitive view of hindsight bias would hold (unless the outcome is surprising-in which case, hindsight bias can be attenuated or even reversed; see Müller & Stahlberg, 2007, for an overview), quite a number of studies have shown that hindsight is reduced and often eliminated under such conditions (Louie, 1999(Louie, , 2005Louie, Curren, & Harich, 2000;Mark, Boburka, Eyssell, Cohen, & Mellor, 2003;Mark & Mellor, 1991;Pezzo & Beckstead, 2008). Importantly, this holds even if any possibly confounding influence of surprise is controlled for (Louie, 1999).…”

“…For instance, Mark et al (2003), comparing their own results with those of Tykocinski and colleagues, ar-making studies that showed a reduction or elimination of hindsight bias, the dependent measures are obvious measures of foreseeability and require no further comment (Louie, 1999;Mark et al, 2003;Mark & Mellor, 1991). In three others (Louie, 2005;Louie et al, 2000;Pezzo & Beckstead, 2008), the participants were asked (1) to make hindsight predictions of the outcome or (2) to recall predictions that they had actually made. Despite the difference in design between these two cases (a so-called hypothetical vs. a memory design; 2 see Pohl, 2007, for an overview of hindsight bias research methodology), both are related to foreseeability: Stating that one (1) would have predicted or (2) in fact did predict the outcome essentially implies that one (claims that one) foresaw this to happen (cf.…”

“…Measure/Question Wording Louie (1999) "I would have predicted that the value would definitely decrease/increase" (direct measure of foreseeability) Louie (2005) Hindsight postdictions of outcome (indirectly related to foreseeability) Louie, Curren, & Harich (2000) Recall of foresight likelihood ratings of outcome (indirectly related to foreseeability) Mark, Boburka, Eyssell, Cohen, & Mellor (2003) Three-item scale: (1) "I was surprised by the performance of this stock" [reverse coded]; (2) "I could foresee what this stock was going to do"; (3) "It was obvious after the first four-day trading period that this stock was going to perform as it did" (direct measure of foreseeability) Mark & Mellor (1991) Scaled response alternatives: (1) "I'm not sure I ever saw it coming"; (2) "I wasn't sure, but suspected it was coming"; (3) "I saw it coming all the way" (direct measure of foreseeability) Pezzo & Beckstead (2008) Recall of foresight likelihood ratings of several outcomes (indirectly related to foreseeability) Sanna & Chang (2003) Experiment 1: inevitability ratings-"what would you have estimated the inevitability that the overall outcome would ultimately turn out to be a failure?" (direct measure of inevitability) Experiment 2: probability ratings-"what would you have thought the probability of performing poorly would be?"…”

Hindsight bias and investment decisions making empirical evidence form an emerging financial market

“…Such phenomenon is studied in other fields like auditing, businesses ethics, court decisions, and many others, and its impact in different situation. The evidence can be found the studies of (Roese & Vohs, 2010;Pezzo & Beckstead, 2008;Mueller & Stahlberg, 2007;Nestler & Egloff, 2009;Lowe & Reckers, 2000;Anderson, Jennings, Lowe, & Reckers, 1997;Gilibert & Banovic, 2009;Wasieleski, Whatley, & Murphy, 2009;Annunziata, 2009;Sligo & Stirton, 1998;Wallace, Chang, Carroll, & Grace, 2009).…”