Overconfident in Hindsight: Memory, Hindsight Bias and Overconfidence
- Matthew Welsh, Australian School of Petroleum, University of Adelaide, Adelaide, South Australia, Australia
AbstractOverconfidence and Hindsight Bias are two well-known cognitive biases. Herein, it is argued these biases may be related to one another and human memory limitations. Specifically, that memory limitations result in hindsight bias, causing people to recall being right more often than they actually were, which leads to overconfidence as people apply this misremembered confidence to future events. Analyses comparing three types of overconfidence (overestimation, overplacement and overprecision) and hindsight bias confirm strong, positive correlations between the different types of overconfidence – from 0.488 up to .807 and moderate correlations (.331 to .398) between all of these and hindsight bias. Comparisons between bias scores and five broad cognitive abilities (from the CHC model) suggests hindsight bias is more pronounced in people with worse memories and generally, lower cognitive ability. Overall, results are argued to support the proposed links between memory, hindsight bias and overconfidence and future directions are suggested.