Outcomes

It’s nowadays pretty much standard procedure to judge everything by the outcomes it produces. This can be blamed on two main issues. Firstly, it’s much easier to evaluate the results of an action than the foundations upon which it was based. Secondly and every bit as important as the first, results are often all that matters in this life. However, one must remember to keep a long term perspective in terms of objectives. This means that we should try to maximise the chances of attaining good results, which in turn is equivalent to betting in the ones with most qualities, which are not necessarily the same as those with best performance (in a finite time interval). Fortune often has an important role in the outcome of these events.

This phenomena of focusing on the outcome while totally despising fortune’s role in the outcome of a decision is well known, being know in psychology as the Outcome Bias. And it is most certainly real. The goalkeeper that dives in the wrong direction in a penalty shoot was tricked or deceived. Had the ball gone that way, though, he would have had a correct a smart reading of the play and of the shooter’s body language. We all know this. But has any of us in fact seen the shot in slow motion, analyzing the players’ movements, actually trying to predict the events or looking for evidence that the goalkeeper is doing the same? Considering the shooter now, scoring a penalty “Panenka style” is a sign of geniality and self confidence. Missing in the same manner, however, reveals stupidity, recklessness, over-confidence and negligence. But what separates one situation from the other, apart from the goalkeeper’s behaviour? Why should we judge the forward’s decision differently depending on others’ response? The subtle way we describe the winners as (positively) confident and the losers as over-confident is by itself interesting enough.

This spreads much wider than sports: stocks were smartly purchased if their value increases, a company well managed if it is successful and even a gambling bet is sometimes considered intelligent if it pays off. Imagine two different roulette players betting recurrently on red. Both of them make five consecutive bets: the first one wins them all while the other wins the first four and loses the last. Obviously, the first player was smart enough to know the right time to call it a day, whereas the latter was clearly misguided by his endless greed. Nevertheless, they both took the same decisions, with access to the same information. The a line between a clever and a stupid move becomes even more tenuous, and therefore its evaluation linked to its outcome, when we mix talent and fortune in an inseparable way. The first example that comes to mind is a poker game.

This phenomena is related to our difficulty in mentally reposition ourselves in a different time or context. When evaluating an event or action, we are unable to put side all posterior information which was not available at the time. Moreover, we tend to be surprised by the way the agents ignore those future events, verbalising statements such as “how did he not did that coming?” In truth, few of us would consider ourselves capable of foreseeing. But none of us thinks twice when it comes to analysing the past, often and systematically misunderstanding flukes for causality, bad luck for incompetence and good fortune for geniality.


Filipe Baptista de Morais