Expectation-outcome consistency and hindsight bias

• Published in: Organizational behavior and human decision processes Vol. 49; no. 1; pp. 105 - 123
• Main Authors: Schkade, David A, Kilbourne, Lynda M
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Inc 01.06.1991; Elsevier
• Series: Organizational Behavior and Human Decision Processes
• Subjects: Behavior. Attitude; Biological and medical sciences; Fundamental and applied biological sciences. Psychology; Psychology. Psychoanalysis. Psychiatry; Psychology. Psychophysiology; Social psychology; Ability; Human; Social perception; Attitude; Decision making; Consistency; Prediction; Probability; Behavior; Expectation; Performance; Professional evaluation
• ISSN: 0749-5978; 1095-9920
• DOI: 10.1016/0749-5978(91)90044-T

Hindsight bias has been found in a wide variety of contexts and proven robust to most attempts at its moderation or elimination. In this paper we identify expectation-outcome consistency as an important moderator of the degree of hindsight bias. Based on Weick's concept of retrospective sense-making and Fischhoff's immediate assimilation explanation, we hypothesize that hindsight bias will be larger when outcomes are inconsistent with expectations than when they are consistent. In two experiments a total of 308 subjects evaluated the decisions of employees by estimating the likelihood of a good outcome. Results show hindsight bias to be significantly larger when outcomes are inconsistent with expectations based on either employees' performance history, employees' current action, or both. In some cases where expectations are confirmed, bias is even eliminated. Further, the bias is significantly larger for negative than for positive outcomes, and there is a “disappointment effect” in which the greatest bias occurs when high expectations are disconfirmed by a negative outcome. Implications for future research and for the process of evaluating other people are discussed.