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Outcome Bias: Definition, Examples and Effects

Outcome bias is a cognitive bias that occurs when people judge a decision based on its outcome rather than its quality. It is a form of hindsight bias, where people tend to overestimate the accuracy of their predictions after the fact. Outcome bias can lead to poor decision-making and can have a negative effect on an individual’s ability to make sound decisions in the future.


Definition: Outcome bias is a cognitive bias that occurs when people judge a decision based on its outcome rather than its quality. It is a form of hindsight bias, where people tend to overestimate the accuracy of their predictions after the fact.


Examples:


One example of outcome bias is when a person evaluates a decision based on the result rather than the process that led to the result. For example, if a person invests in a stock and it goes up in value, they may judge the decision to invest as a good one, even if the decision was made without proper research or analysis.


Another example of outcome bias is when a person evaluates a decision based on the result rather than the process that led to the result. For example, if a person invests in a stock and it goes down in value, they may judge the decision to invest as a bad one, even if the decision was made with proper research and analysis.


Effects: Outcome bias can lead to poor decision-making and can have a negative effect on an individual’s ability to make sound decisions in the future. When people rely on outcome bias, they may be more likely to make decisions based on luck or chance rather than on sound analysis and research. This can lead to poor financial decisions, as well as decisions that are not in the best interest of the individual or organization. Outcome bias can also lead to a lack of accountability, as people may be less likely to take responsibility for their decisions if they are judged based on the outcome rather than the process.


Do you want to expand your knowledge on this topic? Read our full in-depth article on cognitive biases.


Do you have extra 15 minutes today? Takeour fun and interactive quiz to learn which of 16 reasoning styles you use, your overall level of rationality, and what you can do now to improve your rationality skills.

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