The human mind is a master storyteller. When something unexpected happens, it instinctively rushes to explain, to fit the surprise into a coherent story that feels sensible. This ability to make sense of the world helps us learn, adapt, and survive—but it also misleads us in profound ways. What feels like understanding is often illusion.
How We Rewrite the Past
Imagine watching a football match between two evenly matched teams. Before the game, you think their skills are balanced. After the match, one team dominates the other—and instantly, your mind reshapes the story: of course, the winning team was stronger all along. The narrative of the past shifts effortlessly to match the outcome.
This tendency reveals a deep cognitive bias known as hindsight bias, first identified by psychologist Baruch Fischhoff. Once we know how a situation turned out, our recollection of what we believed before changes. We convince ourselves that we “knew it all along.” In reality, our surprise at the event fades from memory, and our judgment of others’ decisions becomes distorted.
The Trap of Outcome Bias
Hindsight bias fuels another distortion: outcome bias. We often judge the quality of a decision by its results, not by whether it was reasonable when it was made. Consider a surgeon performing a low-risk operation that unexpectedly goes wrong. In retrospect, we may blame the surgeon for taking on “too risky” a case—forgetting that, at the time, the decision was rational. Outcomes warp our perception of process.
This bias is particularly unfair to decision-makers like doctors, investors, CEOs, and policymakers—those who act on behalf of others. When things go well, their success seems inevitable; when things go poorly, they look reckless or foolish. As the saying goes, the writing on the wall is always visible in hindsight, though at the time it was written in invisible ink.
The Halo Effect and the Myth of the Predictable World
Our sense-making instinct, powered by what psychologists call System 1 thinking, prefers order over chaos. It edits reality to appear logical, tidy, and predictable. But this comfort comes at a price: it feeds illusions of understanding and illusions of control.
Take the halo effect, a bias that colors our perception of people based on outcomes. A CEO whose company is thriving appears visionary and decisive; when fortunes fade, the same leader suddenly seems rigid and confused. We reverse the causal link, assuming the personality caused the performance—when in fact the performance may have reshaped our perception.
The same fallacy underpins bestselling business books like Built to Last, which promise that success can be distilled into fixed principles. Yet much of corporate distinction is owed to luck, not consistent virtue. Under randomness, apparent patterns of excellence may be nothing more than mirages.
Confidence Is Not Truth
Our confidence in such stories often feels solid, but confidence itself is a feeling—not evidence. It reflects how smoothly ideas fit together, not whether they are true. A coherent story offers emotional ease and reassurance. Admitting uncertainty, on the other hand, feels uncomfortable. Yet wisdom lies in doing precisely that: taking uncertainty seriously rather than mistaking coherence for truth.
When History Hinges on Chance
Perhaps nothing reveals our discomfort with randomness more than how we talk about history. We describe it as a “march,” implying order and purpose. But history often turns on chance. The twentieth century, with all its upheavals, might have looked entirely different if a few biological coin flips had landed another way. The happenstance of three fertilized eggs produced Hitler, Stalin, and Mao—proof that monumental events can rest on the thinnest threads of luck.
Why Algorithms May Outsmart Us
Unlike human minds, formulas don’t suffer from bias or mood swings. Given the same data, they return the same results—something we humans rarely achieve. Whether in credit scoring, sports analytics, or medical diagnostics, algorithms consistently outperform human judgment because they are immune to the subtle influences that shape our decisions: hunger, fatigue, weather, even the warmth of a breeze.
As algorithms increasingly guide daily decisions, from what music to stream to who gets a loan, they quietly hold up a mirror to our cognitive imperfections. Their reliability challenges our need to see the world as coherent—a need that fuels many of our biases in the first place.
Embracing the Unpredictable
To understand the world clearly, we must accept its uncertainty. Our minds crave clean narratives and predictable patterns, but the truth is far messier. Recognizing the limits of our understanding doesn’t diminish us—it humbles us, grounds us, and helps us avoid the trap of false certainty. The past is not as clear as we remember, and the future, though uncertain, need not be feared.
Source : Thinking, Fast and Slow by Daniel Kahneman
Goodreads : https://www.goodreads.com/book/show/11468377-thinking-fast-and-slow
Read the Previous Article in the Series :
Thinking Beyond Science 
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