Outcome Bias and how to avoid it

How often have you wondered about a bad decision in your life? Do you think the result would have changed if only you acted differently or made different choices? Since childhood we are taught to make decisions based on our experiences, but what about the bias that influences how we come to these decisions in the first place?

One such bias that affects the way we perceive experiences and decisions is called the outcome bias. By definition, Outcome Bias is the tendency to judge a decision based on its eventual outcome instead of the quality of the decision at the time it was made. For instance, just because you won the lottery once does not mean that spending money on more tickets is a good decision. Similarly, if you think you reached home safe even though you were driving drunk, does not mean you would be so lucky the second time. However, a person will more likely to do it again.

In both scenarios, a favorable result is followed by poor decisions. If you apply this logic to people just imagine what happens when:

• A person with good intentions has to struggle with failure.
• A person with bad intentions has become successful.

If you are only paying attention to results, we can end up punishing good intentions and rewarding bad ones. We do this even without realizing the effect it might have on us and our lives. That’s probably something we don’t want to do.

So, how do we avoid it?

We can learn to recognize these biases and put steps in place to counteract our natural tendencies to distort information to suit ourselves.

One of the problems with outcome bias is attention. We, as humans, have a tendency to focus our attention on results. We evaluate other people based on how rich or successful they are but rarely wonder about their actions. If a person is successful that whatever he did must be right and we must also do the same. The problem with this kind of thinking is that it does not take into account the intentions of that person. Without considering the underlying motives of a person and only judging him on the basis of his performance is not wise.

What if such a person is put in a position of power and authority? One can only wonder. Similarly, such a bias might have the opposite effect when a person with good intentions is blamed for negative outcomes.

What to do about it?

Never judge a decision purely by its result especially if are not aware of the various factors that play a role. A bad result does not mean a bad decision was made or vice versa. So instead of worrying about a wrong decision, or congratulating yourself for a coincidental achievement, think about why you did what you did. Were your decisions based on reason and rationality or were they biased?

It is important to remember that the process that led to the outcome, including the intentions of a person must be taken into account before evaluating the results of their actions.

While coming to a decision, make a list of various factors, note down all the pros and cons. Writing down things always gives more clarity. Personally, I use Reverie to write down all that is going on in my mind while making decisions.