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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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    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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