A surgeon needs to decide whether or not to perform surgery on a patient. The surgery has a 70% chance of saving the patient's life and a 30% chance of killing the patient. The surgeon decides to perform the surgery, but the patient dies. Did the surgeon make a bad decision?

An investor is given the option of buying $5,000 with of stock. There's a 20% chance that the stock will be worth $50,000 in a year, and an 80% chance that it will be worth nothing. He buys the stock and it loses all its value. Did the investor make a bad decision?

If you said "yes" to either question above then you are a victim of outcome bias: you're judging a decision based on information that wasn't known when the decision was made. Given the information available at the time, both decisions were right. Neither the surgeon nor the investor should feel guilty for his decision, even though they both turned out badly in the end.

Unfortunately most people frequently heap guilt upon themselves for decisions that turn out badly even though they were right at the time they were made. This may explain another cognitive bias: loss aversion.

(HT: HealthBolt, GeekPress, and BBSpot.)

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