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Outcome Bias

Outcome bias is the tendency to judge the quality of a decision mainly by what happened afterward rather than by the information and reasoning available when the decision was made.

Why it matters to you

Suppose you estimate: YES: 70% and buy at: $0.50 YES loses. That does not automatically prove the trade was poor. A 70% event can still fail. Likewise, buying a badly overpriced contract that happens to win does not automatically make the original decision good.

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