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In psychology, there is a phenomenon called Outcome Bias, which basically means that we tend to judge the efficacy of a decision based primarily on how things turn out. After a decision is made, we rarely examine the conditions that existed at the time of the decision, choosing instead to evaluate performance based solely (or mostly) on whether the end result was positive or not.
But what happens as luck plays a role in outcomes? Did we actually make the best decision? Or was the result really a product of conditions outside of our control?
Understanding Outcome Bias
A relatively strong example of Outcome Bias can be found in the gambling world. Take poker, for instance. Many players will overplay the cards they are dealt. Imagine that you have four cards to a straight. There are two remaining cards to play. You might make bets that are statistically weak, but if the card you were looking for shows up, you will evaluate your own performance as strong for the hand. After all, you did win, right?
The challenge with Outcome Bias is that the fortuitous turn of events leads you play other hands in a similar way. Despite the fact Continue reading