No Harm, No Foul: The Outcome Bias in Ethical Judgments

Too often, workers are evaluated based on results rather than on the quality of the decision. Given that most consequential business decisions involve some uncertainty, the upshot is that organizations wind up rewarding luck rather than wisdom. From a rational decision-making perspective, people’s decisions should be evaluated based on the information the decision maker had available to him or her at the time, and not based on the ultimate results. This paper tests predictions about this effect, known as the outcome bias, in two studies in which participants were asked to consider various ethically questionable behaviors. Participants were also given information about the outcome of such behaviors and were asked to rate the ethicality of the described actions with or without the outcome information. The findings extend prior research in psychology and ethics. Key concepts include:

* The tendency demonstrated in these two studies might lead people to blame others too harshly for making sensible decisions that have unlucky outcomes.
* The outcome bias could also partly explain the slow reactions that people tend to have when they observe others’ unethical behavior.
* It is worth trying to understand a decision maker’s state of mind. Judging decisions based on their outcomes will wind up condemning too many unlucky people and acquitting too many scoundrels.