Working Paper: NBER ID: w17477
Authors: Lars Lefgren; Brennan Platt; Joseph Price
Abstract: Outcome bias occurs when an evaluator considers ex-post outcomes when judging whether a choice was correct, ex-ante. We formalize this cognitive bias in a simple model of distorted Bayesian updating. We then examine strategy changes made by professional football coaches. We find they are more likely to revise their strategy after a loss than a win -- even for narrow losses, which are uninformative about future success. This increased revision following a loss occurs even when a loss was expected, and the offensive strategy is revised even when failure is attributable to the defense. These results are consistent with our model's predictions.
Keywords: outcome bias; decision making; NFL coaches; Bayesian updating
JEL Codes: C11; D03; D81; L83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Outcome of a game (C73) | Revision of offensive strategies (L21) |
| Loss (G33) | Revision of offensive strategies (L21) |
| Win (D44) | Persistence in passing strategy (C41) |
| Outcome bias (G41) | Strategy adjustments after losses (L21) |