A Reverse Outcome Bias: The Influence of Multiple Reference Points on the Evaluation of Outcomes and Decisions

Two experiments examined the influence of multiple reference points on the evaluation of outcomes and decisions that lead to those outcomes. Norm theory is applied as a conceptual framework for understanding the conditions under which alternative norms may be evoked by the decision context and how they are subsequently used as reference points in the evaluation process. Of primary interest, in these studies, was how an outcome is evaluated when two reference points, the status quo and an evoked alternative, provide conflicting information about the "goodness" of the outcome (the outcome is good from the perspective of one reference point and bad from the perspective of the other). A gambling paradigm, based on regret theory, is employed to address these questions. We find that an alternative outcome is more likely to be evoked as a reference point when: (1) it is certain that another choice would have led to the alternative outcome; (2) a social comparison other receives the alternative outcome; and (3) the alternative outcome is in a different evaluative domain than the outcome received (i.e., is negative when the outcome received is positive). When these conditions hold, and the alternative outcome is used as a reference point for evaluation, the evaluations which result are quite counterintuitive: winners are rated as more regretful over their choices than losers are considered to be less satisfied with their outcomes than losers, and are rated as having made poorer quality decision than losers, who made the same choice! The latter finding represents a complete reversal of the outcome bias often observed in judgments of decisions made under uncertainty.