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Hindsight bias

New York city has had a very high number of cases of the Coronavirus, and the peak is still a week or two away if you are to listen to the experts.

They could have probably prevented it from escalating to such an extent had they acted earlier and introduced stricter social distancing measures earlier. When asked why they hadn't, I saw one of the political leaders (can't remember who) say that had they introduced stricter measures back in mid February, it would have been the equivalent of closing down the country to protect it from an alien invasion.

I agree with him that it would have seemed absurd to lockdown a city or a country when there are hardly any cases. The people making the decision are in a no-win situation. If they close down very early, then the extent of the spread is minimal and they are then criticised for over-reacting as nobody would know what the extent of the spread would have been without the measures. And if they don't close down early, they find themselves in the situation they are in now with people complaining that they didn't act early enough.

It is a lot easier to say what someone should have done, in hindsight. But to actually do it at the time is an altogether different thing.

What has helped me in overcoming hindsight bias is to have models for decision making. For instance, a simple model to make a decision on when to pull money out of the stock market could be "Sell if the value drops below 80% of what I bought it at".

Coming up with this sort of a model involves understanding how various inputs impact the things you care about and then make decisions based on these early indicators.

This doesn't guarantee that we will always make the right decision, but we will get it right more often than not.

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