In case the investor loses his money, then the investor will indicate he/she knew beforehand that they will face a loss and this feeling comes after the regret. For example, an investor feels pressure while taking a long position in the market with the aim of maximization the return. The hindsight bias can occur while making a big decision or a very small decision. The hindsight bias creates confidence in the person that they have the capability to foresee future outcomes or events, if the person is able to make any correct prediction. In case the cricket team wins, then the person claims that he/ she had a feeling that the team will win. For example, a person places a bet on a team winning a cricket match, and the odds of that team winning are very low. The hindsight bias is also known as the knew-it-all-along phenomenon and creeping determinism. Investors can wrongly feel that the reason for their losses was known to them all along.įrequently Asked Questions (FAQs) What are the impacts of hindsight bias?.
Hindsight bias is a part of behavioural economics.Hindsight bias is a phenomenon in which people overestimate their capacity to predict an event even when it is not possible to predict it before its occurrence.As a result, the investor might face losses. For example, traders tend to get the hindsight bias when three is a buying pressure and investors overlook the past trend. Hindsight bias is a part of behavioural economics and generally takes place in the investment field. Hindsight bias is a phenomenon in which people overestimate their capacity to predict an event when it is not possible to do so before its occurrence.
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