What Is Outcome Bias?
Outcome bias arises when a decision is based on the outcome of previous events, without regard to how the past events developed. Outcome bias does not involve analysis of factors that lead to a previous event, and instead de-emphasizes the events preceding the outcomes and overemphasizes the outcome. Unlike hindsight bias, outcome bias does not involve the distortion of past events.
Understanding Outcome Bias
Outcome bias can be more dangerous than hindsight bias in that it only evaluates actual outcomes. For example, an investor decides to invest in real estate after learning a colleague made a big return on an investment in real estate when interest rates were at a different level. Rather than look at other factors that could have resulted in the colleague’s success, such as the health of the overall economy or performance of real estate, the investor is focusing on the money made by the colleague.
Gamblers also fall prey to outcome bias. While statistically, casinos come out ahead far more regularly, many gamblers use anecdotal "evidence" from friends and acquaintances to justify their continued playing. This outcome bias: that continuing to play could result in winning a large amount of money prevents the gambler from leaving the casino.
In business settings, an overemphasis on "performance" is increasingly creating an outcome-centric culture which often exacerbates people’s fears by creating up a zero-sum game in which people are either succeeding or losing and “winners” quickly get weeded out from “losers.”
As an example, few would argue with the impressive growth of social media companies. During this growth, only a handful of individuals cautioned against the methods by which growth was generated. Upon learning personal and private user data was a significant driver of growth, the outcome bias of social media is on full display. In effect, ethical lapses are generally overlooked during successful outcomes. However, bad outcomes are far more likely to produce active condemnation.
FAQs
Outcome bias arises when a decision is based on the outcome of previous events, without regard to how the past events developed. Outcome bias does not involve analysis of factors that lead to a previous event, and instead de-emphasizes the events preceding the outcomes and overemphasizes the outcome.
What is bias and how does it work? ›
Bias is a preference in favor of, or against a person, group of people, or thing. These initial human reactions, which are often unconscious, are rooted in inaccurate information or reason and are potentially harmful.
What is the solution to outcome bias? ›
You can overcome the outcome bias by thinking about people's intentions first, then thinking about the outcomes. This process avoids dividing attention between intentions and outcomes. And it makes intuitive sense to most people.
What is outcome bias in decision evaluation Baron? ›
In a seminal study, Baron and Hershey (1988) documented the outcome biasnamely, people's tendency to judge the quality of a decision based on its consequences, even when those consequences do not attest to the quality of the decision.
How does bias affect outcome? ›
Bias can be dangerous and, when mixed with power and privilege, can create inequitable outcomes for society's most vulnerable people. Bias does not just sit within people; it is often used as the basis for decision-making and the rationale behind actions that we take. Bias can influence actions that are discriminatory.
What is an example of outcome reporting bias? ›
If you find that people who ate more vegetables were healthier than those who didn't and then decide that this means eating vegetables improves health, you may have fallen victim to outcome reporting bias because it was never your intention to study how vegetables affect health outcomes.
What is the best explanation of bias? ›
Bias means to look at a person, object, or event without objectivity. Bias can also be described as showing favoring behavior or prejudice towards people, objects, or events.
What is an example of bias answer? ›
For example, a team is deciding between two proposals. One person thinks proposal A is better, but the rest of the team is leaning towards proposal B. That person is swayed by their opinions and ends up voting for proposal B because everyone else did.
What does bias mean in a short sentence? ›
the action of supporting or opposing a particular person or thing in an unfair way, because of allowing personal opinions to influence your judgment: The senator has accused the media of bias. Reporters need to be impartial and not show political bias.
What are 3 ways to reduce bias? ›
Suggestions
- Learn meditation techniques. Engage in mindfulness meditation as a way to slow down in general.
- Someone shares an experience that is unfamiliar or counters your own observations. ...
- Ask yourself: “How would I feel if someone asked me that question?”
- Learn the history of communities different from yours.
Hindsight bias is the tendency for people with outcome knowledge to exaggerate the extent to which they would have predicted the event beforehand, while outcome bias refers to the influence of outcome knowledge upon evaluations of decision quality.
How do you avoid bias results? ›
There are ways, however, to try to maintain objectivity and avoid bias with qualitative data analysis:
- Use multiple people to code the data. ...
- Have participants review your results. ...
- Verify with more data sources. ...
- Check for alternative explanations. ...
- Review findings with peers.
A classic example of the outcome bias is observed in the world of sports. A coach who decides to try a risky strategy in a game may be hailed as a genius if the team wins but deemed foolish if the team loses, regardless of the strategy's inherent merit.
How can outcome bias be exploited? ›
In the Force treatment, we find that agents predict and exploit outcome bias better than principals commit against it. Agents manipulate the principal's bias by strategically revealing information about luck prior to the principal's punishment choice.
What is positive outcome bias? ›
Positive Outcome Bias is the human tendency to think that their actions are going to produce better outcomes than they practically can. Even in bleak situations, people are inclined to think that when they do something, outcomes will turn out better than is likely, simply because of their inherent over-optimism.
What is an example of outcome bias in the workplace? ›
Business: Outcome bias is also common in business, where individuals and companies are often judged based on their financial performance. For instance, a company that has a profitable quarter may be perceived as having made good decisions, even if those decisions were risky or poorly informed.
What is the outcome bias in sports? ›
The outcome bias occurs when people assess others' decision making process or performance and put an unwarranted weight to their outcomes. This bias has important implications for the judgment and choice as well as the performance appraisal literatures.
What is the outcome bias in machine learning? ›
What is bias in artificial intelligence? AI bias, also referred to as machine learning bias or algorithm bias, refers to AI systems that produce biased results that reflect and perpetuate human biases within a society, including historical and current social inequality.
