The coexistence of overestimation and underweighting of rare events and the contingent recency effect
Journal Title: Judgment and Decision Making - Year 2009, Vol 4, Issue 6
Abstract
Previous research demonstrates overestimation of rare events in judgment tasks, and underweighting of rare events in decisions from experience. The current paper presents three laboratory experiments and a field study that explore this pattern. The results suggest that the overestimation and underweighting pattern can emerge in parallel. Part of the difference between the two tendencies can be explained as a product of a contingent recency effect: Although the estimations reflect negative recency, choice behavior reflects positive recency. A similar pattern is observed in the field study: Immediately following an aversive rare-event (i.e., a suicide bombing) people believe the risk decreases (negative recency) but at the same time exhibit more cautious behavior (positive recency). The rest of the difference is consistent with two well established mechanisms: judgment error and the use of small samples in choice. Implications for the two-stage choice model are discussed.
Authors and Affiliations
Greg Barron and Eldad Yechiam
Keywords
Related Articles
- EP ID EP677700
- DOI -
- Views 176
- Downloads 0
Different heuristics and same bias: A spectral analysis of biased judgments and individual decision rules
We used correlation and spectral analyses to investigate the cognitive structures and processes producing biased judgments. We used 5 different sets of driving problems to exemplify problems that trigger biases, specific...
The average laboratory samples a population of 7,300 Amazon Mechanical Turk workers
Using capture-recapture analysis we estimate the effective size of the active Amazon Mechanical Turk (MTurk) population that a typical laboratory can access to be about 7,300 workers. We also estimate that the time taken...
The false allure of fast lures
The Cognitive Reflection Test (CRT) allegedly measures the tendency to override the prepotent incorrect answers to some special problems, and to engage in further reflection. A growing literature suggests that the CRT is...
Applying the decision moving window to risky choice: Comparison of eye-tracking and mouse-tracing methods
Currently, a disparity exists between the process-level models decision researchers use to describe and predict decision behavior and the methods implemented and metrics collected to test these models. The current work s...
Overconfidence over the lifespan
This research investigated how different forms of overconfidence correlate with age. Contrary to stereotypes that young people are more overconfident, the results provide little evidence that overestimation of one’s perf...