Outcome bias
Also called: resulting
Judging a decision by how it turned out rather than by the information and reasoning available when it was made.
In uncertain situations, good decisions can lose and bad ones can win. Outcome bias leads investors to repeat lucky mistakes and abandon sound plans after bad luck. Judging the process, including the information, reasoning, range of outcomes and size of the bet, gives better lessons.
Learn more in these lessons
- Good decisions and good outcomesDoes a profitable investment prove it was a good decision?
- Reviewing mistakes and updating conclusionsHow do you learn from investment mistakes without fooling yourself?
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