Outcome Bias

crystal ball

Imagine you want to learn how to play blackjack, and you have the chance to choose your teacher from one of three players. After watching them play several hands, player 1 has won £100, player 2 has won £50 and player 3 has lost £100. If you asked player one to teach you how to play because they won the most money, then you are falling prey to Outcome Bias. Did they win the most money because they made the best decisions? Or did they win the most money despite the poor quality of their decisions? 

How Outcome Bias can influence our decisions

Outcome Bias occurs when the quality of a decision is evaluated by an outcome that is already known. The quality of a decision should be based on the process, information and thinking that went into the decision at the time, rather than the ultimate outcome alone. Short of having a crystal ball, no decision maker can know what set of actions will result in the desired outcome with 100% certainty. What they can do is calculate the known risks and choose the set of actions that have the highest probability of achieving the desired outcome. Unfavourable predicted probabilities can occur, even unknown unknowns can impact the outcome. When decision makers are judged by outcome alone, Outcome Bias condemns them to events beyond their control. 

Researchers Baron and Hershey tested how Outcome Bias can influence our decisions back in 1988, when they tested decision makers with hypothetical situations. You are presented with a surgeon faced with the decision of whether or not to perform a high risk surgery on a patient. The surgery had a known probability of succeeding. The surgery’s outcome is a success, the patient lives, how would you rate the quality of the surgeon’s pre-operation decision? The results of the study found that those that were presented with a positive outcome rated the decision better than those who were presented with negative outcomes, or the probability of the patient dying. 

Interested in using behavioural science to understand your audiences better? Write to us at contact@lynnpr.co.uk to get started on your behavioural insights journey.

This article was written by Duart Rankin, Account Executive at Lynn PR.