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
Procedural priming of a numerical cognitive illusion
A strategy activated in one task may be transferred to subsequent tasks and prevent activation of other strategies that would otherwise come to mind, a mechanism referred to as procedural priming. In a novel application...
Measuring Risk Literacy: The Berlin Numeracy Test
We introduce the Berlin Numeracy Test, a new psychometrically sound instrument that quickly assesses statistical numeracy and risk literacy. We present 21 studies (n=5336) showing robust psychometric discriminability acr...
Back or to the future? Preferences of time travelers
Popular culture reflects whatever piques our imagination. Think of the myriad movies and books that take viewers and readers on an imaginary journey to the past or the future (e.g., Gladiator, The Time Machine). Despite...
The letter versus the spirit of the law: A lay perspective on culpability
The letter of the law is its literal meaning. Here, the spirit of the law is its perceived intention. We tested the hypothesis that violating the spirit of the law accounts for culpability above and beyond breaking the m...
What might judgment and decision making research be like if we took a Bayesian approach to hypothesis testing?
Judgment and decision making research overwhelmingly uses null hypothesis significance testing as the basis for statistical inference. This article examines an alternative, Bayesian approach which emphasizes the choice b...