Effect (‘knew it all along” effect) occurring when a rationale for a prior decision or conclusion is used to explain a current decision or conclusion. This may include the incorrect recollection of the circumstances of the prior decision or conclusion and/or the belief that the new decision or conclusion was the same or “predictable.”
Source: Behavioral Science Lab, 2017
This bias, also referred to as the ‘knew-it-all-along effect’, is a frequently encountered judgment bias that is partly rooted in availability and representativeness heuristics. It happens when being given new information changes our recollection from an original thought to something different (Mazzoni & Vannucci, 2007). This bias can lead to distorted judgments about the probability of an event’s occurrence, because the outcome of an event is perceived as if it had been predictable. It may also lead to distorted memory for judgments of factual knowledge. Hindsight bias can be a problem in legal decision making. In medical malpractice suits, for example, jurors’ hindsight bias tends to increase with the severity of the outcome (e.g. injury or death) (Harley, 2007).
Source: Behavioral Economics