Hindsight bias, Behavioral Finance

deshvedu

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I don’t seem to understand the hindsight bias frm reading 8. Could someone explain this to me please?
Also, the consequences of all these biases is hard to remember. How are you people managing?
 
To eliminate chance and uncertainty you see past events as almost inevitable and likely and obvious to occur in the future You have a bunch of good sentences in the book that might help you.
Also, take a look at the consequences of this bias:

As a result of hindsight bias, FMPs may do the following:
1) Overestimate the degree to which they predicted an investment outcome, thus giving them a false sense of confidence. The hindsight bias may cause FMPs to take on excessive risk, leading to future investment mistakes.
2) Cause FMPs to unfairly assess money manager or security performance. Based on their ability to look back at what has taken place in securities markets, performance is compared against what has happened as opposed to expectations.
(Level III 2012 Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors, 5th Edition. Pearson Learning Solutions p. 65).

hope this could help a bit… tigas
 
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