take-the-best-heuristic

Take-The-Best Heuristic In A Nutshell

Business / By / October 24, 2023

The take-the-best heuristic is a decision-making shortcut that helps an individual choose between several alternatives. The take-the-best (TTB) heuristic decides between two or more alternatives based on a single good attribute, otherwise known as a cue. In the process, less desirable attributes are ignored.

AspectExplanation
Take-The-Best Heuristic– The Take-The-Best Heuristic is a cognitive shortcut or rule of thumb used by individuals to make decisions by comparing multiple options based on a single, most discriminating cue rather than considering all available information.
Simplicity– This heuristic is characterized by its simplicity; it doesn’t require extensive data processing or analysis. People using this heuristic prioritize efficiency and ease of decision-making.
Cue Selection– When applying the Take-The-Best Heuristic, individuals typically identify the most important cue or piece of information relevant to their decision. They focus on this cue and disregard the rest.
Fast Decision-Making– This heuristic is particularly useful in situations where quick decisions are necessary, such as everyday choices or when there’s limited time or cognitive resources for exhaustive analysis.
Accuracy Trade-Off– While the Take-The-Best Heuristic can lead to efficient decisions, it also involves a potential trade-off in accuracy. By not considering all available information, there’s a risk of overlooking important details or factors.
Heuristic in Practice– Examples of this heuristic in practice include choosing a restaurant based solely on its average customer review rating or selecting a product based on a single prominent feature or benefit.
Real-World Application– The Take-The-Best Heuristic is commonly employed in situations where it is challenging to weigh numerous factors and data points effectively, allowing people to simplify complex decision-making processes.
Limitations– Its effectiveness depends on the accuracy of the chosen cue and the suitability of the decision context. In complex situations where multiple cues are important, relying solely on one cue may lead to suboptimal choices.
Adaptive Behavior– While this heuristic has its limitations, it represents an example of adaptive behavior where individuals use mental shortcuts to make reasonably good decisions with the available cognitive resources.

Understanding the take-the-best heuristic

It was discovered by psychologists Gerd Gigerenzer and Daniel Goldstein as part of their research on human decision making.

They found that the heuristic, which sometimes ignores large amounts of information, could lead to superior performance in many real-world scenarios.

In a 2013 study, researchers found that experienced airport customs staff used the heuristic to select travelers for body searches. To aid in their decision, the officers used attributes such as nationality, amount of luggage, and airport of origin.

The effect can also be seen during elections, where citizens choose a candidate based on whether they satisfy one attribute such as a foreign or economic policy.

The TTB decision-making process

Imagine that someone has been asked to determine the larger of two American cities.

  1. The decision-maker begins by considering the attributes (cues) of American cities. In this example, attributes may be the presence of an airport, freeway system, or the total square mileage of the urban area. Whatever the example, however, attributes must be binary (“yes” or “no”) in nature.
  2. The decision-maker then orders the attributes based on their ability to predict the criterion being judged – or which of the two cities is larger. Attributes are ranked according to cue validity, or the probability that a criterion falls in a particular category given a particular cue. In other words, is the cue of a freeway system likely to successfully predict the larger of the two cities?
  3. When comparing attributes, the individual assigns a value of 1 (yes) or 0 (no) depending on whether the attribute is present in each city. Both cities may possess the first cue, an airport, giving them a cue value of 1. However, this means that the presence of an airport alone does not discriminate between the two cities. Put differently, airports are not a good predictor of city size.
  4. The individual then moves to the cue with the next highest validity, which they determine is the presence of a freeway system. They find that City A does have a freeway, giving it a cue value of 1. City B does not, giving it a cue value of 0. At this point, the decision-maker concludes that City A is larger because the freeway attribute has a high discriminatory value. This means that the attribute has a higher likelihood of allowing the decision-maker to successfully chose between the two alternatives. 

Limitations to the take-the-best heuristic

The TTB heuristic is a so-called “fast-and-frugal” strategy that reduces cognitive load.

However, it is not immune to overthinking. The strategy is vulnerable to decision-makers who continue past the stopping point, defined as the point where a cue with a high discriminatory value is found.

By considering more information than is required, cognitive load increases and then impedes decision-making ability.

Furthermore, individuals may not be able to rank attributes based on their predictive ability. This can result in attribute comparisons that have no bearing on the successful selection of a criterion.

Key takeaways

  • The take-the-best heuristic is a “fast-and-frugal” decision-making strategy that helps individuals choose between two or more alternatives.
  • The take-the-best heuristic is based on research that suggests that decisions leading to superior performance can be made with large amounts of information.
  • While the take-the-best heuristic reduces cognitive load, practitioners who ignore the stopping point must necessarily consider more information to decide. In some cases, this can increase cognitive load. 

Case Studies

  • Consumer Product Selection: When shopping for a new smartphone, a consumer might focus on a single key feature, such as camera quality, to make a decision. They may ignore other features that are less important to them, like battery life or processor speed.
  • Stock Investment: An investor looking to buy stocks might use the TTB heuristic by considering a single criterion, such as a company’s historical revenue growth, to decide whether to invest. They may disregard other financial metrics if they believe revenue growth is the most reliable indicator.
  • College Admissions: A high school student applying to colleges might prioritize a single factor, like the reputation of a university’s engineering program, when deciding where to attend. Other factors, such as location or extracurricular activities, may be less relevant in their decision-making process.
  • Restaurant Selection: When choosing a restaurant for dinner, a person might base their decision on a single cue, such as online ratings or recommendations from friends. They may not consider other factors like the restaurant’s ambiance or menu variety if the chosen cue is highly influential for them.
  • Job Candidate Selection: During the hiring process, a recruiter might use the TTB heuristic by focusing on one key qualification, such as relevant work experience, to make a hiring decision. Other factors, such as educational background or soft skills, may be considered less important.
  • Home Purchase: A homebuyer may prioritize a single criterion, such as the neighborhood’s safety rating, when choosing a place to live. They may disregard other factors like commute time or school quality if safety is their primary concern.
  • Travel Planning: When planning a vacation, a traveler might base their destination choice on one key factor, such as the availability of outdoor activities like hiking. They may not consider other factors like cultural attractions if outdoor activities are their top priority.
  • Medical Treatment: A patient facing multiple treatment options might use the TTB heuristic by focusing on a single criterion, such as the success rate of a particular procedure, to decide on their course of treatment. Less influential factors may be overlooked.
  • Investigative Journalism: Journalists investigating a complex story may prioritize a single key lead or source that they believe holds the most critical information. They may spend the majority of their resources and time pursuing this lead while deprioritizing less relevant aspects of the story.
  • Educational Course Selection: When choosing elective courses in college, a student might select a course based on a single cue, such as the instructor’s reputation for engaging teaching. They may not consider other factors, such as the course content or schedule, as heavily.
  • Software Selection: When a business is choosing software for a specific task, they might prioritize a single critical feature, such as data security, and base their decision on this key attribute. Other software features may be less relevant if data security is their primary concern.
  • Vendor Selection: In the procurement process, a company may use the TTB heuristic to choose a vendor by focusing on one essential criterion, like cost-effectiveness. Other factors, such as vendor reputation or customer service, may be disregarded if cost-effectiveness is the top priority.
  • Product Development: During product development, a tech company may prioritize one core feature, such as user interface simplicity, to guide their design choices. They may not invest significant resources in additional features if a user-friendly interface is their primary goal.
  • Project Prioritization: In project management, a team may prioritize projects based on a single key factor, such as potential revenue generation. They may deprioritize projects with lower revenue potential, even if those projects offer other benefits.
  • Investment Decisions: Venture capitalists or angel investors may use the TTB heuristic when evaluating startup investments. They might focus on one crucial aspect, like the team’s expertise, to make investment decisions, while other factors may be less influential.
  • Tech Stack Selection: When building a new tech product, developers might choose a tech stack based on one primary factor, such as scalability. They may ignore other considerations if scalability is the most critical requirement for their project.
  • Cybersecurity Measures: In cybersecurity, organizations may prioritize one critical aspect, like vulnerability patching, when allocating resources for security measures. Other security measures may be less emphasized if patching vulnerabilities is deemed the most important.
  • Marketing Campaigns: Marketing teams may use the TTB heuristic to decide which marketing channels to invest in by focusing on one key metric, such as conversion rate. Less effective channels may be deprioritized in favor of the most successful one.
  • Product Feature Selection: Tech product managers may prioritize one core feature, such as mobile responsiveness, when deciding which features to include in a product’s next release. Less critical features may be postponed or excluded if mobile responsiveness is a top user requirement.
  • Content Strategy: Content creators and marketers may prioritize one key element, such as audience engagement, when developing content strategies. They may invest more resources in content that maximizes engagement, while other content may receive less attention.

Key Highlights

  • Definition: The take-the-best (TTB) heuristic is a decision-making shortcut used by individuals to choose between alternatives. It involves considering a single key attribute (cue) to make a decision, while ignoring less relevant attributes.
  • Origin: Psychologists Gerd Gigerenzer and Daniel Goldstein discovered the TTB heuristic as part of their research on human decision making.
  • Superior Performance: Despite ignoring a significant amount of information, the TTB heuristic can lead to superior performance in various real-world scenarios.
  • Real-world Examples: Airport customs staff and voters during elections have been observed using the TTB heuristic. Customs officers use attributes like nationality and luggage amount to select travelers for searches, while voters might base decisions on a candidate’s stance on a single policy issue.
  • Decision-making Process: The TTB heuristic involves ordering attributes based on their predictive power and assigning binary values (1 for present, 0 for absent) to each attribute for the alternatives being considered.
  • Attribute Ranking: Attributes are ranked by their cue validity, which is the likelihood that a cue predicts the criterion being evaluated. The decision-maker starts with the most valid cue.
  • Limitations: While the TTB heuristic reduces cognitive load, it’s not immune to overthinking. People might continue considering attributes beyond the stopping point, which increases cognitive load and impairs decision-making. Also, accurately ranking attributes based on their predictive ability can be challenging.
  • Fast-and-Frugal Strategy: The TTB heuristic is categorized as a “fast-and-frugal” strategy, which means it’s designed to simplify decision-making by focusing on a few key cues rather than processing all available information.
  • Effective with Limited Information: The TTB heuristic is particularly useful when there’s a large amount of information to consider, as it helps individuals make decisions efficiently.
  • Strategic Ignorance: TTB involves selectively ignoring attributes that are less likely to contribute significantly to the decision-making process, thus streamlining the decision process.
  • Single Cue Decision: The TTB heuristic relies on a single cue to make a decision, which makes it easy to implement and reduces the cognitive load associated with evaluating multiple cues.
  • Research Basis: The TTB heuristic is grounded in empirical research and has been explored in various decision-making contexts, highlighting its applicability in diverse situations.

Connected Thinking Frameworks

Convergent vs. Divergent Thinking

convergent-vs-divergent-thinking
Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.

Critical Thinking

critical-thinking
Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.

Biases

biases
The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Second-Order Thinking

second-order-thinking
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

lateral-thinking
Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Bounded Rationality

bounded-rationality
Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

dunning-kruger-effect
The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

occams-razor
Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Lindy Effect

lindy-effect
The Lindy Effect is a theory about the ageing of non-perishable things, like technology or ideas. Popularized by author Nicholas Nassim Taleb, the Lindy Effect states that non-perishable things like technology age – linearly – in reverse. Therefore, the older an idea or a technology, the same will be its life expectancy.

Antifragility

antifragility
Antifragility was first coined as a term by author, and options trader Nassim Nicholas Taleb. Antifragility is a characteristic of systems that thrive as a result of stressors, volatility, and randomness. Therefore, Antifragile is the opposite of fragile. Where a fragile thing breaks up to volatility; a robust thing resists volatility. An antifragile thing gets stronger from volatility (provided the level of stressors and randomness doesn’t pass a certain threshold).

Ergodicity

ergodicity
Ergodicity is one of the most important concepts in statistics. Ergodicity is a mathematical concept suggesting that a point of a moving system will eventually visit all parts of the space the system moves in. On the opposite side, non-ergodic means that a system doesn’t visit all the possible parts, as there are absorbing barriers

Systems Thinking

systems-thinking
Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.

Vertical Thinking

vertical-thinking
Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.

Metaphorical Thinking

metaphorical-thinking
Metaphorical thinking describes a mental process in which comparisons are made between qualities of objects usually considered to be separate classifications.  Metaphorical thinking is a mental process connecting two different universes of meaning and is the result of the mind looking for similarities.

Maslow’s Hammer

einstellung-effect
Maslow’s Hammer, otherwise known as the law of the instrument or the Einstellung effect, is a cognitive bias causing an over-reliance on a familiar tool. This can be expressed as the tendency to overuse a known tool (perhaps a hammer) to solve issues that might require a different tool. This problem is persistent in the business world where perhaps known tools or frameworks might be used in the wrong context (like business plans used as planning tools instead of only investors’ pitches).

Peter Principle

peter-principle
The Peter Principle was first described by Canadian sociologist Lawrence J. Peter in his 1969 book The Peter Principle. The Peter Principle states that people are continually promoted within an organization until they reach their level of incompetence.

Straw Man Fallacy

straw-man-fallacy
The straw man fallacy describes an argument that misrepresents an opponent’s stance to make rebuttal more convenient. The straw man fallacy is a type of informal logical fallacy, defined as a flaw in the structure of an argument that renders it invalid.

Google Effect

google-effect
The Google effect is a tendency for individuals to forget information that is readily available through search engines. During the Google effect – sometimes called digital amnesia – individuals have an excessive reliance on digital information as a form of memory recall.

Streisand Effect

streisand-effect
The Streisand Effect is a paradoxical phenomenon where the act of suppressing information to reduce visibility causes it to become more visible. In 2003, Streisand attempted to suppress aerial photographs of her Californian home by suing photographer Kenneth Adelman for an invasion of privacy. Adelman, who Streisand assumed was paparazzi, was instead taking photographs to document and study coastal erosion. In her quest for more privacy, Streisand’s efforts had the opposite effect.

Compromise Effect

compromise-effect
Single-attribute choices – such as choosing the apartment with the lowest rent – are relatively simple. However, most of the decisions consumers make are based on multiple attributes which complicate the decision-making process. The compromise effect states that a consumer is more likely to choose the middle option of a set of products over more extreme options.

Butterfly Effect

butterfly-effect
In business, the butterfly effect describes the phenomenon where the simplest actions yield the largest rewards. The butterfly effect was coined by meteorologist Edward Lorenz in 1960 and as a result, it is most often associated with weather in pop culture. Lorenz noted that the small action of a butterfly fluttering its wings had the potential to cause progressively larger actions resulting in a typhoon.

IKEA Effect

ikea-effect
The IKEA effect is a cognitive bias that describes consumers’ tendency to value something more if they have made it themselves. That is why brands often use the IKEA effect to have customizations for final products, as they help the consumer relate to it more and therefore appending to it more value.

Ringelmann Effect 

Ringelmann Effect
The Ringelmann effect describes the tendency for individuals within a group to become less productive as the group size increases.

The Overview Effect

overview-effect
The overview effect is a cognitive shift reported by some astronauts when they look back at the Earth from space. The shift occurs because of the impressive visual spectacle of the Earth and tends to be characterized by a state of awe and increased self-transcendence.

House Money Effect

house-money-effect
The house money effect was first described by researchers Richard Thaler and Eric Johnson in a 1990 study entitled Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice. The house money effect is a cognitive bias where investors take higher risks on reinvested capital than they would on an initial investment.

Heuristic

heuristic
As highlighted by German psychologist Gerd Gigerenzer in the paper “Heuristic Decision Making,” the term heuristic is of Greek origin, meaning “serving to find out or discover.” More precisely, a heuristic is a fast and accurate way to make decisions in the real world, which is driven by uncertainty.

Recognition Heuristic

recognition-heuristic
The recognition heuristic is a psychological model of judgment and decision making. It is part of a suite of simple and economical heuristics proposed by psychologists Daniel Goldstein and Gerd Gigerenzer. The recognition heuristic argues that inferences are made about an object based on whether it is recognized or not.

Representativeness Heuristic

representativeness-heuristic
The representativeness heuristic was first described by psychologists Daniel Kahneman and Amos Tversky. The representativeness heuristic judges the probability of an event according to the degree to which that event resembles a broader class. When queried, most will choose the first option because the description of John matches the stereotype we may hold for an archaeologist.

Take-The-Best Heuristic

take-the-best-heuristic
The take-the-best heuristic is a decision-making shortcut that helps an individual choose between several alternatives. The take-the-best (TTB) heuristic decides between two or more alternatives based on a single good attribute, otherwise known as a cue. In the process, less desirable attributes are ignored.

Bundling Bias

bundling-bias
The bundling bias is a cognitive bias in e-commerce where a consumer tends not to use all of the products bought as a group, or bundle. Bundling occurs when individual products or services are sold together as a bundle. Common examples are tickets and experiences. The bundling bias dictates that consumers are less likely to use each item in the bundle. This means that the value of the bundle and indeed the value of each item in the bundle is decreased.

Barnum Effect

barnum-effect
The Barnum Effect is a cognitive bias where individuals believe that generic information – which applies to most people – is specifically tailored for themselves.

Anchoring Effect

anchoring-effect
The anchoring effect describes the human tendency to rely on an initial piece of information (the “anchor”) to make subsequent judgments or decisions. Price anchoring, then, is the process of establishing a price point that customers can reference when making a buying decision.

Decoy Effect

decoy-effect
The decoy effect is a psychological phenomenon where inferior – or decoy – options influence consumer preferences. Businesses use the decoy effect to nudge potential customers toward the desired target product. The decoy effect is staged by placing a competitor product and a decoy product, which is primarily used to nudge the customer toward the target product.

Commitment Bias

commitment-bias
Commitment bias describes the tendency of an individual to remain committed to past behaviors – even if they result in undesirable outcomes. The bias is particularly pronounced when such behaviors are performed publicly. Commitment bias is also known as escalation of commitment.

First-Principles Thinking

first-principles-thinking
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

ladder-of-inference
The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Goodhart’s Law

goodharts-law
Goodhart’s Law is named after British monetary policy theorist and economist Charles Goodhart. Speaking at a conference in Sydney in 1975, Goodhart said that “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Goodhart’s Law states that when a measure becomes a target, it ceases to be a good measure.

Six Thinking Hats Model

six-thinking-hats-model
The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Mandela Effect

mandela-effect
The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

crowding-out-effect
The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

bandwagon-effect
The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Moore’s Law

moores-law
Moore’s law states that the number of transistors on a microchip doubles approximately every two years. This observation was made by Intel co-founder Gordon Moore in 1965 and it become a guiding principle for the semiconductor industry and has had far-reaching implications for technology as a whole.

Disruptive Innovation

disruptive-innovation
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Value Migration

value-migration
Value migration was first described by author Adrian Slywotzky in his 1996 book Value Migration – How to Think Several Moves Ahead of the Competition. Value migration is the transferal of value-creating forces from outdated business models to something better able to satisfy consumer demands.

Bye-Now Effect

bye-now-effect
The bye-now effect describes the tendency for consumers to think of the word “buy” when they read the word “bye”. In a study that tracked diners at a name-your-own-price restaurant, each diner was asked to read one of two phrases before ordering their meal. The first phrase, “so long”, resulted in diners paying an average of $32 per meal. But when diners recited the phrase “bye bye” before ordering, the average price per meal rose to $45.

Groupthink

groupthink
Groupthink occurs when well-intentioned individuals make non-optimal or irrational decisions based on a belief that dissent is impossible or on a motivation to conform. Groupthink occurs when members of a group reach a consensus without critical reasoning or evaluation of the alternatives and their consequences.

Stereotyping

stereotyping
A stereotype is a fixed and over-generalized belief about a particular group or class of people. These beliefs are based on the false assumption that certain characteristics are common to every individual residing in that group. Many stereotypes have a long and sometimes controversial history and are a direct consequence of various political, social, or economic events. Stereotyping is the process of making assumptions about a person or group of people based on various attributes, including gender, race, religion, or physical traits.

Murphy’s Law

murphys-law
Murphy’s Law states that if anything can go wrong, it will go wrong. Murphy’s Law was named after aerospace engineer Edward A. Murphy. During his time working at Edwards Air Force Base in 1949, Murphy cursed a technician who had improperly wired an electrical component and said, “If there is any way to do it wrong, he’ll find it.”

Law of Unintended Consequences

law-of-unintended-consequences
The law of unintended consequences was first mentioned by British philosopher John Locke when writing to parliament about the unintended effects of interest rate rises. However, it was popularized in 1936 by American sociologist Robert K. Merton who looked at unexpected, unanticipated, and unintended consequences and their impact on society.

Fundamental Attribution Error

fundamental-attribution-error
Fundamental attribution error is a bias people display when judging the behavior of others. The tendency is to over-emphasize personal characteristics and under-emphasize environmental and situational factors.

Outcome Bias

outcome-bias
Outcome bias describes a tendency to evaluate a decision based on its outcome and not on the process by which the decision was reached. In other words, the quality of a decision is only determined once the outcome is known. Outcome bias occurs when a decision is based on the outcome of previous events without regard for how those events developed.

Hindsight Bias

hindsight-bias
Hindsight bias is the tendency for people to perceive past events as more predictable than they actually were. The result of a presidential election, for example, seems more obvious when the winner is announced. The same can also be said for the avid sports fan who predicted the correct outcome of a match regardless of whether their team won or lost. Hindsight bias, therefore, is the tendency for an individual to convince themselves that they accurately predicted an event before it happened.

Read Next: Biases, Bounded Rationality, Mandela Effect, Dunning-Kruger Effect, Lindy Effect, Crowding Out Effect, Bandwagon Effect.

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About The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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