Outcome bias

Outcome bias is a cognitive bias that occurs when people judge the quality of a decision based on its outcome rather than the quality of the decision at the time it was made. This bias can lead to an inaccurate assessment of the decision-making process as it disregards the information available when the decision was made, focusing instead on the result.

How it works

Outcome bias skews perception by emphasizing the results of a decision, rather than the decision process itself. When evaluating the success or failure of a decision, individuals or organizations often overlook whether the right decision was made based on known information at the time, concentrating instead on the outcome's favorability. This can result in misjudging the decision's effectiveness since luck or external factors, which were not part of the original decision-making process, might have driven the outcome.

Examples

• A poker player makes a risky bet with poor odds and wins. Observers might inaccurately conclude the player made a good decision because of the favorable outcome, neglecting the poor risk-reward ratio present during the decision.
• A company launches a faulty product that becomes successful unexpectedly due to unique circumstances. Stakeholders might praise the initial decision-making instead of recognizing that success might have been due to extraneous factors.
• A student guesses all answers on a multiple-choice test and scores high. An observer might conclude that the student's approach was correct, despite the success being due to luck rather than skill or knowledge.

Consequences

Outcome bias can lead to repeated poor decision-making if individuals or organizations reward outcomes rather than processes. It might encourage riskier behavior because decision makers fail to learn from the true nature of past decisions, skewing training, promotions, or rewards based on results rather than merit. Furthermore, it may contribute to unfair judgment and accountability for situations beyond one's control.

Counteracting

To counteract outcome bias, focus should be placed on improving decision-making processes irrespective of the results by systematizing evaluations that consider initial conditions and possible variables. Techniques such as pre-mortems, red teaming, or structured reflection can aid in this. Encouraging a culture that values analytical rigor and process over purely results can mitigate outcome bias.

Critiques

Some argue that it is impractical or excessively rigid to entirely disconnect outcomes from decision quality evaluations, especially in environments where results are ultimately important. Others propose that focusing on the process might lead to complacency, reducing the motivation to achieve tangible results.

Fields of Impact

Also known as

Relevant Research

• Outcome bias in decision evaluation

  Baron, J. and Hershey, J.C. (1988)

  Journal of Personality and Social Psychology

• Judging decision quality: Outcome bias in different judgment tasks

  Roese, N.J. and Vohs, K.D. (2012)

  Organizational Behavior and Human Decision Processes