Please use this identifier to cite or link to this item: 
Year of Publication: 
[Journal:] Theory and Decision [ISSN:] 1573-7187 [Volume:] 90 [Issue:] 1 [Publisher:] Springer US [Place:] New York, NY [Year:] 2020 [Pages:] 31-61
Springer US, New York, NY
We document outcome bias in situations where an agent makes risky financial decisions for a principal. In three experiments, we show that the principal’s evaluations and financial rewards for the agent are strongly affected by the random outcome of the risky investment. This happens despite her exact knowledge of the investment strategy, which can, therefore, be assessed independently of the outcome. The principal thus judges the same decision by the agent differently, depending on factors that the agent has no influence on. The effect of outcomes persists in a setting where principals communicate a preferred investment level. Principals are more satisfied with the agent after a random success when the agent did not follow the requested investment level, than after a failed investment that followed their explicit request.
Decision under risk
Decisions of agents
Outcome bias
Financial advice
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Document Version: 
Published Version

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.