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Auswirkungen des Hindsight Bias auf ökonomische Entscheidungen

Author

Listed:
  • Schwarz, Stefan

    (Sonderforschungsbereich 504)

  • Stahlberg, Dagmar

    (Lehrstuhl fuer Sozialpsychologie, Sonderforschungsbereich 504)

Abstract

Hindsight bias ("Knew it all along effect") describes the tendency for people to falsely believe that they would have predicted the outcome of an event, once the outcome is known. Some authors (e.g. Bukszar and Connolly, 1988, Hoch and Loewenstein, 1989, Fischhoff, 1975) assumed, that in retrospect, people who are subject to the hindsight bias perceive the outcome of a decision as inevitable and not surprising. As a consequence they do not learn from past decisions and tend to overestimate their ability to predict the outcome of future decisions. This might result in a low quality of future decisions. We conducted an experiment to test this hypothesis. In a computer scenario participants had to manage a tailor-shop for (fictitious) six months. In each month participants in the control group were asked to predict the monthly income of the tailor-shop after they had made their monthly management decisions. After that the outcomes (including the income) of their management decisions were presented on the monitor. Participants in the experimental group made their monthly management decisions, saw the outcomes (including the income) of these decisions on the monitor and were then asked to predict the expected monthly income of the tailor-shop as if they would not have known it. At the end of the computer scenario we measured the participants' optimism to make good management decisions, if they would play the computer scenario again. Addition-ally we measured the total wealth they had earned during their management of the tailor-shop. The results of the experiment showed no hindsight bias. Further analyses showed - in line with the hypothesis - that participants, who tended to show the hindsight bias were more op-timistic to make good decisions in the future, but - contrarily to our hypothesis - earned more money in the tailor-shop. Results are discussed in terms of motivational functions of hindsight bias: It is assumed that the hindsight bias buffers the effe

Suggested Citation

  • Schwarz, Stefan & Stahlberg, Dagmar, 1999. "Auswirkungen des Hindsight Bias auf ökonomische Entscheidungen," Sonderforschungsbereich 504 Publications 99-66, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    • Handle: RePEc:xrs:sfbmaa:99-66
    Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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