The tendency to construct coherent stories that explain past events, creating an illusion of understanding and predictability.
After a company succeeds, business books construct coherent narratives about visionary leadership and strategic brilliance, ignoring luck and alternative explanations. The narrative makes success seem inevitable in hindsight.
A coherent story indicates genuine understanding—narrative coherence is a poor indicator of truth, especially for complex events with multiple causes.
Thinking, Fast and Slow
Daniel Kahneman
Systematic tendency to overestimate the accuracy of our beliefs and predictions, especially in low-validity environments.
After an outcome is known, we can't help but see it as having been predictable, underestimating how uncertain it was beforehand.
After an outcome is known, we can't help but see it as having been predictable, underestimating how uncertain it was beforehand.
Systematic tendency to overestimate the accuracy of our beliefs and predictions, especially in low-validity environments.
High confidence in predictions based on coherent stories, even when predictive validity is low or zero.
Why does narrative coherence create an illusion of understanding?
How does the narrative fallacy relate to hindsight bias?