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What Is Outcome Bias?
Let me explain outcome bias directly to you: it's a cognitive bias where you base your decisions on the results of past events, completely disregarding how those events unfolded. You don't analyze the factors that contributed to a previous outcome; instead, you downplay everything that happened before and put too much weight on the end result. This differs from hindsight bias because it doesn't twist your memory of past events—it's all about the outcome itself.
Understanding Outcome Bias
You need to grasp why outcome bias can be more hazardous than hindsight bias— it strictly judges based on what actually happened, without any deeper look. Take this example: suppose you decide to invest in real estate because you heard a colleague scored a huge return when interest rates were low. You're not considering other elements like the overall economy or real estate market trends; you're just fixated on your colleague's profit.
Gamblers often fall into this trap too. Casinos statistically win more often, but you might justify keep playing based on stories from friends who hit it big. That's outcome bias at work— the idea that you could win big keeps you there, ignoring the odds.
In business, this bias is pushing a culture that's all about 'performance,' which ramps up people's fears by turning everything into a zero-sum game where you're either a winner or a loser, and losers get cut fast.
Consider the rapid growth of social media companies—few questioned the tactics behind it at the time. But when it came out that user data exploitation drove that growth, outcome bias showed its face: ethical shortcuts get ignored in success, yet failures draw heavy criticism.
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