Hindsight Bias, Risk Perception, and Investment Performance

@article{Biais2009HindsightBR,
  title={Hindsight Bias, Risk Perception, and Investment Performance},
  author={Bruno Biais and Martin Weber},
  journal={Manag. Sci.},
  year={2009},
  volume={55},
  pages={1018-1029}
}
Once they have observed information, hindsight-biased agents fail to remember how ignorant they were initially; “they knew it all along.” We formulate a theoretical model of this bias, providing a foundation for empirical measures and implying that hindsight-biased agents learning about volatility will underestimate it. In an experiment involving 66 students from Mannheim University, we find that hindsight bias reduces volatility estimates. In another experiment, involving 85 investment bankers… 
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Once they have observed information, hindsight biased agents fail to remember how ignorant they were initially. This bias has been amply documented by the psychological literature. To study its
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