Hindsight bias is the tendency of people to falsely believe that they would have correctly predicted the outcome of an event once it is known. The present paper addresses the ongoing debate as to whether the hindsight bias is due to memory impairment or biased reconstruction. The memory impairment approach maintains that outcome information alters the memory trace of the initial judgement, whereas the biased reconstruction approach assumes that people who have forgotten their initial judgements are forced to guess and, in the presence of outcome information, are likely to use this information as an anchor. Whereas the latter approach emphasises the role of meta-cognitive considerations, meta-cognitions are not included in the memory impairment explanation. Two experiments show that the biased reconstruction approach provides a better explanation for empirical findings in hindsight bias research than does the memory impairment explanation.