Hindsight Bias and Inferences in Choice: The Mediating Effect of Cognitive Effort

The purpose of this paper is to determine whether inferences about missing attribute information made in a choice context are susceptible to hindsight bias and, more importantly, whether an increase in the amount of cognitive effort expended during the choice process diminishes the hindsight bias effect. The results of two experiments confirm our expectation that the strength of the hindsight bias effect is related to the extent of processing during choice. Hindsight bias is weakest when the subjects work hardest, that is, when the attractiveness of the partially described option is uncertain, when the attribute with missing information is most important, and when the importance of the attribute with missing information is ambiguous.