Question

Module 4 discusses common errors in thinking, such as hindsight bias, overconfidence, and the tendency to perceive order in random events. Describe hindsight bias and overconfidence, and provide examples of each.

Answer 1

Answer: See explanation

Step-by-step explanation:

Hindsight bias refers to a psychological phenomenon whereby an individual is convinced that he or she predicted an event accurately before it occurred. This eventually leads to overconfidence in the ability of the person to forecast other future events. An example is when one attends a football game and insist that he or she knew that a certain team will win beforehand.

Overconfidence bias is when a person has more confidence than what one should objectively have with regards to the precision of the forecast and the degree of certainty that the prediction will be correct. An example is someone who believes that he has a great sense of direction that's better than it actually is and such person goes on a long journey without a map due to his overconfidence.