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The Hidden Dangers of Hindsight Bias: When the Past Deceives

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What is Hindsight Bias?

Hindsight Bias is the tendency for people to think that events that have already happened were more predictable than they were in reality. Often, Hindsight Bias is signaled when someone says, “I knew it all along!”

Hindsight Bias: People think past events were more predictable than they were.

When a story is created after an event, it downplays things that could have happened but didn’t. It’s back to that feeling of “I knew it all along.” You start to believe that success and failure were obvious back when we made the decision. The problem is, this bias creates an illusion that success or failure was evident to anyone paying attention at the time, which usually isn’t true.

New Coke: An Example of Professional Hindsight Bias

For example, Coca-Cola’s New Coke debacle — where the company rolled out an expensive and high-profile change in the recipe of Coke classic — seemed like a good idea at the time. The brand had dedicated $4 million to develop the product, then doubled down on marketing once the product launched.

Eventually, the brand pulled New Coke from the shelves and destroyed more than $30 million in unwanted products. In retrospect, it seems like a no-brainer that messing with classic Coke was a terrible idea. But at the time, Coca-Cola had been losing ground to Pepsi for years. Mainly due to the famous ‘Pepsi challenge’ marketing campaign that pitted the two sodas against one another in a blind taste test.

It made a lot of sense at the time to consider reformulating Coke’s flavor to better compete with Pepsi. Later, marketers declared, “We knew it all along!” and created a narrative that described the brand as overconfident, verging on the brink of sanity when it decided to create New Coke.

To avoid Hindsight Bias, ask yourself:

  • How might I change my decision if I thought my track record at predicting outcomes was terrible?
  • Consider the messenger — how does this story reflect on the people telling it? The better it makes them look, the more it might indicate some Hindsight Bias is at play.

About the author

Jen Clinehens, MS/MBA

Hi 👋 I'm Jen Clinehens (MS, MBA) the founder and Managing Director of Choice Hacking.

I started Choice Hacking in 2021 to help marketers and entrepreneurs figure out what makes buyers tick, and elevate their work using behavioral science, marketing psychology, and AI.

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