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For What It's Worth: Outcome Bias in Managerial Decisions

Author

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  • Jan C. van Ours

    (Erasmus University Rotterdam)

Abstract

Decisions informed by past events can be distorted when outcomes partially determined by chance are misinterpreted as purely skill-based. This can lead to outcome bias, where decisions are evaluated based on results rather than the quality of the performance that produced them. Outcome bias is prevalent across domains, including managerial decision-making. This paper investigates outcome bias in professional football, a highly competitive industry. The analysis is based on managers who were replaced within-season from 2017/18 to 2024/25 in the top divisions of the five main European football leagues. The main finding is that clubs tend to change managers in response to recent match results rather than underlying performance indicators. This behavior reflects an economically inefficient decision-making process driven by outcome bias.

Suggested Citation

  • Jan C. van Ours, 2025. "For What It's Worth: Outcome Bias in Managerial Decisions," Tinbergen Institute Discussion Papers 25-054/V, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20250054
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    References listed on IDEAS

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    1. Pascal Flurin Meier & Raphael Flepp & Egon Franck, 2023. "Replication: Do Coaches Stick With What Barely Worked? Evidence of Outcome Bias in Professional Sports," Working Papers 400, University of Zurich, Department of Business Administration (IBW).
    2. Kocher, Martin G. & Sutter, Matthias, 2010. "Introduction to special issue "The Economics and Psychology of Football"," Journal of Economic Psychology, Elsevier, vol. 31(2), pages 155-157, April.
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    4. Lars Lefgren & Brennan Platt & Joseph Price, 2015. "Sticking with What (Barely) Worked: A Test of Outcome Bias," Management Science, INFORMS, vol. 61(5), pages 1121-1136, May.
    5. Alex Bryson & Babatunde Buraimo & Alex Farnell & Rob Simmons, 2021. "Time To Go? Head Coach Quits and Dismissals in Professional Football," De Economist, Springer, vol. 169(1), pages 81-105, February.
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    7. Jan C. van Ours, 2025. "Good Vibrations: Outcome Bias in Consumer Demand," Tinbergen Institute Discussion Papers 25-055/V, Tinbergen Institute.
    8. Jedelhauser, Fabienne & Flepp, Raphael & Meier, Pascal Flurin & Franck, Egon, 2025. "Does performance pressure accentuate outcome bias? Evidence from managerial dismissals," Journal of Economic Behavior & Organization, Elsevier, vol. 236(C).
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    12. Meier, Pascal Flurin & Flepp, Raphael & Franck, Egon, 2023. "Replication: Do coaches stick with what barely worked? Evidence of outcome bias in sports," Journal of Economic Psychology, Elsevier, vol. 99(C).
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    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • Z20 - Other Special Topics - - Sports Economics - - - General

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