Outcome Bias

Jamie cashed out big from playing crypto-roulette. She was bragging to all of her friends about how she bought low and sold high, making solid earnings off of cryptocurrency spread. Joe wanted in the game, so he bought the same kind of crypto Jamie did...except, it turns out, he bought the cryptocurrency when it was high, not low. Now, Joe is sad.

Why did Joe just buy the crypto? Outcome bias. Joe looked at what the outcome was for Jamie, and figured he could get the same outcome...but without looking at how and why Jamie had a good outcome (his critical mistake). If Joe had talked to Jamie, he would have learned that she heavily researched multiple currencies and the current market. Joe should have learned how and why Jamie got the results she did, focusing on her decisions and actions rather than her outcome.

Outcome bias happens to the best of us, when we are focusing more on the outcome of past events than the how-and-why of those past events, in making current decisions. Deciding to jump into a new, hot market without actually learning about what’s happening and why is oftentimes because of outcome bias. Casinos take advantage of outcome bias, with gamblers using anecdotes to inform their decisions over actual statistics (yes, the casinos always win in the aggregate, or else they wouldn’t be in business).