THE HINDSIGHT ILLUSION. We think we understand the past,
which implies the future should be knowable, but in fact we understand the past less
than we believe we do. Our intuitions and premonitions feel more true after the fact.
Once an event takes place we forget what we believed prior to that event, before we
changed our minds. Prior to 2008 financial pundits predicted a stock market crash but
they did not know it. Knowing means showing something to be true. Prior to 2008 no one
could show that a crash was true because it hadn’t happened yet. But after it happened
their hunches were retooled and become proofs. “The tendency to revise the history of
one’s beliefs in light of what actually happened produces a robust cognitive illusion,”
(page 203). Potential for error: “We are prone to blame decision makers for good decisions
that worked out badly and to give them too little credit for successful moves that appear
obvious only after the fact. When the outcomes are bad, the clients often blame their
agents for not seeing the handwriting on the wall—forgetting that it was written in
invisible ink that became legible only afterward. Actions that seemed prudent in
foresight can look irresponsibly negligent in hindsight,” (page 203).