Abstract

An outcome bias occurs when performance is evaluated based upon the outcome of the decision rather than upon the quality of the decision itself. This paper tests experimentally whether the outcome bias occurs due to uncertainty in the decision quality. The results reveal that competent advisors eliminating the uncertainty in the decision quality mitigate the outcome bias in decision quality judgements in particular after bad outcomes. However, after bad outcomes, advised decision-makers are significantly less willing to continue following an optimal advice than non-advised decision-makers. These observations suggest that a competent advice can improve the understanding that good decisions can lead to bad outcomes just by chance, but it cannot prevent emotional reactions after bad outcomes; on the contrary, it can even reinforce them.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call