The dwarves are initially very wary of Lake-town and its people. However, they eventually come to trust Bilbo and are very grateful to him for saving them.
Explanation:
The dwarves have been through a lot and they are not sure who to trust. They are also not used to being around humans. However, Bilbo has proven himself to be a trustworthy and reliable friend. He has also put their safety above his own on multiple occasions. Because of this, the dwarves come to trust Bilbo and are very grateful to him for saving them.
“When thinking” is the right answer (the definition of retrospect is “a survey or review of a past course of events or period of time”. So “when thinking “ is most likely the right answer.
