Outcome Bias: The Nastiest Bias of All

How to build self respect and self worth

Posted By: TeamTKN

Mindset

The other night, my family and I were playing UNO–a fun card game that involves basic skills and basic luck. My husband had won the first few rounds, and my children had decided that he was likely to win all future rounds because “dad’s a winner.”

Innocent enough. I think dad’s a winner too.

However, this same thought pattern can easily become more sinister. Imagine a few high-risk decisions spin your way. You begin to believe that high-risk decisions are your key to success. You must just be the kind of person who thrives in a high-risk environment. So, you continue to put yourself (and those in your care) into increasingly risky situations because your track record “proves” that that’s where you thrive.

What is Outcome Bias?

These kinds of judgments are known as Outcome (or hindsight) Bias.* Too often, we make judgments about decisions and decision-makers based on the OUTCOME of the decision rather than the use of REASON, LOGIC OR EVIDENCE.

*Disclaimer: As discussed in previous posts, these judgments are not inherently “bad.”They are an ingrained way humans learn. This discussion is intended to provide context for these judgments rather than suppress or “solve” them.

It is natural to want to make sense of our world.

Decisions are hard.

Life is uncertain.

Judging decisions based on the outcome feels like a pragmatic way of building confidence based on the “data.”

But when we judge a decision by its outcome, we are building on the wrong information.

Consider the common responses to the following scenarios:

A high risk decision that turns out well is applauded.

A high-risk decision that turns out poorly is judged to be OBVIOUSLY foolish.

A low risk decision that turns out poorly is punished.

A low risk decision that turns out well is normal.

And note how NONE OF THESE RESPONSES TAKE INTO ACCOUNT THE ACTUAL DECISION MAKING PROCESS. We simply reward stupid decisions that turned out well while punishing reasonable decisions that turned out poorly.

And if that isn’t enough silliness for us, we take outcome bias a step further by turning the judgment of our outcomes into a judgment of ourselves.

“I’m such a idiot.”

“I just can’t lose.”

“I work best under pressure.”

Why is outcome bias dangerous?

When you give in to outcome bias, you are judging the decisions you made in the past based on new information YOU COULD NOT HAVE HAD ACCESS TO during the decision making process (ie the actual outcome).

Instead of growing in our ability to use reason, logic and evidence to make decisions (a skill that would actually benefit us in our present decisions), we employ “shortcuts” that rely on labeling and stereotyping.

These labels make us feel like we understand the world more clearly, but end up leaving us with an intellectual sludge of:

Survivorship bias
Risk aversion
Confusingly high rewards and praise for lucky outcomes
Contempt and punishment for responsible decision-makers
Labeling and stereotyping people
False confidence in our ability to predict the future

Dr. Kashey is here to remind us that:

A stupid decision that works out well is still a stupid decision.

A good decision that works out poorly is still a good decision

How is outcome bias dangerous for you?

Everything makes sense when you look back at it, and that’s what makes it so dangerous. By immediately labeling your decisions a success or failure, you rob yourself of the ability to purposefully learn from any experience.

Additionally, by neglecting the impact luck had on the outcome, you risk “learning” from something that is an erroneous reconstruction of what happened.

Sure, it feels good to feel confident of the future.

But if your self-confidence is built on a faulty understanding of the relationship between the decision and the outcome, you are building on a precarious foundation.

You begin to assume that since a stupid decision turned out well that it will continue to turn out well. And so you continue to build and reinforce stereotypes while bolstering a false sense of confidence that makes you feel like you know more than you really do.

In the end, you will find yourself atop a teetering tower of artificially high levels of certainty.

Certainty of the future leads to certainty in your expectations.

And the devastation that finally comes when those expectations are violated is nothing short of toxic.

What can we do?

If outcome bias and rapid judgments are built into our brains, then what can we do?

How do we recruit our “rational brains” into our decision making process, when it feels so automatic to rely on our impulsive thought patterns?

Dr. Kashey proposes that we need 3 tools to do this:

Fundamental knowledge–an understanding of the laws governing the situation. (book knowledge)

Technical knowledge-an understanding of the nuances governing the laws (working knowledge)

Narrative Knowledge-a heavily-stocked factual account of how the situation progressed (the whole story)

Rather than using the outcome of a decision to determine its merit, we can learn from our past decisions by reflecting on the fundamental, technical and narrative aspects that were present in the decision. Once these three categories are addressed, it is easy to see how luck played a part in the process. We are then free to learn from the decision itself.

Now we actually have a foundation to stand on.

This frees us from living in the past or prophesying the future, and firmly equips us to address the present. We are able to focus on the RELEVANT data as we make our decisions, and we are able to build our tolerance for risk.

We know that regardless of the outcome, our self-worth is unchanged.

We grow our self-respect by separating ourselves from our decisions.

We become less frightened of taking risks because we are more than the outcome of our decisions.

We make mistakes. We are not mistakes.

Now we actually have a foundation to stand on.

We know that regardless of the outcome, our self-worth is unchanged.

We grow our self-respect by separating ourselves from our decisions.

We become less frightened of taking risks because we are more than the outcome of our decisions.

We make mistakes. We are not mistakes.

why outcome bias is so dangerous

These labels make us feel like we understand the world more clearly, but end up leaving us with an intellectual sludge of:

Survivorship bias
Risk aversion
Confusingly high rewards and praise for lucky outcomes
Contempt and punishment for responsible decision-makers
Labeling and stereotyping people
False confidence in our ability to predict the future

About Jacquelyn Laporte

Jacquelyn LaPorte has had the privilege of working with TKN since 2018. The journey has been a wild one, but it has ushered her into the driver’s seat of her own life. She learned how to ask questions, answer them honestly and act on the answers. She has used this process to become a better parent to her 3 kids, a better wife, a better boss, a better learner, a better human. She believes that no experience is wasted, (not even majoring in a dead language with no career plan😊 or starting a business with 0 entrepreneurial spirit). Each experience gives the gift of new eyes. Perfect choices are not required, and that makes her free to choose.

“There are a thousand thousand reasons to live this life, and every one of them sufficient.”

-Marilynne Robinson-