Good decision vs. good results: Outcome bias in the evaluation of financial agents [Dataset]

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 eval-
uations 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 out-
come. 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.