Original paper
Understanding outcome bias
Abstract
Disentangling effort and luck is critical when evaluating outcomes. In a principal-agent experiment, we demonstrate that principals' judgments of agents are biased by luck, despite perfectly observable effort. This erodes the power of incentives to stimulate effort. We explore two potential solutions to this “outcome bias”–information control, and outsourcing judgment to independent third parties. Both are ineffective. When principals control...
Paper Details
Title
Understanding outcome bias
Published Date
Sep 1, 2019
Journal
Volume
117
Pages
342 - 360
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Notes
History