01 Apr 2008Working Paper Summaries

No Harm, No Foul: The Outcome Bias in Ethical Judgments

by Francesca Gino, Don A. Moore and Max H. Bazerman

Too often, workers are evaluated based on results rather than on the quality of the decision. Given that most consequential business decisions involve some uncertainty, the upshot is that organizations wind up rewarding luck rather than wisdom. From a rational decision-making perspective, people's decisions should be evaluated based on the information the decision maker had available to him or her at the time, and not based on the ultimate results. This paper tests predictions about this effect, known as the outcome bias, in two studies in which participants were asked to consider various ethically questionable behaviors. Participants were also given information about the outcome of such behaviors and were asked to rate the ethicality of the described actions with or without the outcome information. The findings extend prior research in psychology and ethics. Key concepts include:

The tendency demonstrated in these two studies might lead people to blame others too harshly for making sensible decisions that have unlucky outcomes.
The outcome bias could also partly explain the slow reactions that people tend to have when they observe others' unethical behavior.
It is worth trying to understand a decision maker's state of mind. Judging decisions based on their outcomes will wind up condemning too many unlucky people and acquitting too many scoundrels.

Author Abstract

Two studies investigated the influence of outcome information on ethical judgment. Participants read a series of vignettes describing ethically-questionable behaviors. We manipulated whether those behaviors were followed by a negative or positive consequence. As hypothesized, participants judged behavior as less ethical when it was followed by a negative consequence. In addition, they judged the behavior as more blameworthy and to be punished more harshly. Participants' ethical judgments mediated their judgments of both blame and punishment. The results of the second experiment showed again that participants rated behavior as less ethical when it led to undesirable consequences, even if they saw that behavior as acceptable before they knew its consequences. Implications for both research and practice are discussed.