Biases
The power of rank information
Jinseok Chun & Richard Larrick
Journal of Personality and Social Psychology, forthcoming
Abstract:
People, organizations, and products are continuously ranked. The explosion of data has made it easy to rank everything, and, increasingly, outlets for information try to reduce information loads by providing rankings. In the present research, we find that rank information exerts a strong effect on decision making over and above the underlying information it summarizes. For example, when multiple options are presented with ratings alone (e.g., "9.7" vs. "9.5") versus with ratings and corresponding ranks (e.g., "9.7" and "1st" vs. "9.5" and "2nd"), the presence of rank information increases preference for the top ranked option. This effect of ranking is found in a variety of contexts, ranging from award decisions in a professional sports league to hiring decisions to consumer choices, and it is independent of other well-known effects (such as the effect of sorting). We find that the influence of ranks is explained by the extent to which decision makers attend to the top ranked option and overlook the other options when they are given rank information. Because they invest a disproportionate amount of attention to the top ranked option when they are given rank information, decision makers tend to learn the strength of the top ranked option, but they fail to process the strengths of the other options. We discuss how rank information may operate as one of the processes by which those at the top of the hierarchy maintain a disproportionate level of popularity in the market.
People mistake the internet's knowledge for their own
Adrian Ward
Proceedings of the National Academy of Sciences, 26 October 2021
Abstract:
People frequently search the internet for information. Eight experiments (n = 1,917) provide evidence that when people "Google" for online information, they fail to accurately distinguish between knowledge stored internally - in their own memories - and knowledge stored externally - on the internet. Relative to those using only their own knowledge, people who use Google to answer general knowledge questions are not only more confident in their ability to access external information; they are also more confident in their own ability to think and remember. Moreover, those who use Google predict that they will know more in the future without the help of the internet, an erroneous belief that both indicates misattribution of prior knowledge and highlights a practically important consequence of this misattribution: overconfidence when the internet is no longer available. Although humans have long relied on external knowledge, the misattribution of online knowledge to the self may be facilitated by the swift and seamless interface between internal thought and external information that characterizes online search. Online search is often faster than internal memory search, preventing people from fully recognizing the limitations of their own knowledge. The internet delivers information seamlessly, dovetailing with internal cognitive processes and offering minimal physical cues that might draw attention to its contributions. As a result, people may lose sight of where their own knowledge ends and where the internet's knowledge begins. Thinking with Google may cause people to mistake the internet's knowledge for their own.
In case of doubt for the speculation? When people falsely remember facts in the news as being uncertain
Ann-Kathrin Brand, Annika Scholl & Hauke Meyerhoff
Journal of Experimental Psychology: General, forthcoming
Abstract:
Modern media report news remarkably fast, often before the information is confirmed. This general tendency is even more pronounced in times of an increasing demand for information, such as during pressing natural phenomena or the pandemic spreading of diseases. Yet, even if early reports correctly identify their content as speculative (rather than factual), recipients may not adequately consider the preliminary nature of such information. Theories on language processing suggest that understanding a speculation requires its reconstruction as a factual assertion first-which can later be erroneously remembered. This would lead to a bias to remember and treat speculations as if they were factual, rather than falling for the reverse mistake. In six experiments, however, we demonstrate the opposite pattern. Participants read news headlines with explanations for distinct events either in form of a fact or a speculation (as still being investigated). Both kinds of framings increased participants' belief in the correctness of the respective explanations to an equal extent (relative to receiving no explanation). Importantly, however, this effect was not mainly driven by a neglect of uncertainty cues (as present in speculations). In contrast, our memory experiments (recognition and cued recall) revealed a reverse distortion: a bias to falsely remember and treat a presented "fact" as if it were merely speculative. Based on these surprising results, we outline new theoretical accounts on the processing of (un)certainty cues which incorporate their broader context. Particularly, we propose that facts in the news might be remembered differently once they are presented among speculations.
Developmental change in the use of base-rates and individuating information
Samantha Gualtieri & Stephanie Denison
Journal of Experimental Psychology: General, forthcoming
Abstract:
Adults tend to make biased inferences when they are given base-rates (i.e., prior probabilities) that conflict with individuating information (i.e., a personality description), relying heavily on individuating information. Recent work has shown that six-year-olds do the same, whereas four-year-olds rely more on prior probabilities. In the present article, we revisit the argument that producing responses that align closely with base-rates should necessarily be seen as normative. We instead posit that rational inferences should be sensitive to all relevant information and should depend on its strength. In three experiments, we explored four-year-olds', six-year-olds' (N = 200), and adults' (N = 196) information use by manipulating the strength of individuating and base-rate information. Across base-rate manipulations, adults showed a bias for individuating information regardless of its strength. In contrast, six-year-olds appeared to use each type of information flexibly, depending on which was more informative. Four-year-olds' performance was less clear: Although they relied on base-rates when they were informative, they struggled to use the individuating information in their inferences and did not appreciate the manipulation of the strength of individuating information. Thus, six-year-olds appear to more flexibly use multiple sources of information than both younger children and adults, suggesting a period in development where children are able to weigh information before they are too biased toward individuating information.
Underestimating Learning by Doing
Samantha Horn & George Loewenstein
Carnegie Mellon University Working Paper, October 2021
Abstract:
Many economic decisions, such as whether to invest in developing new skills, change professions, or purchase a new technology, benefit from accurate estimation of skill acquisition. We examine the accuracy of such predictions by having experimental participants predict the speed at which they will master an unfamiliar task. The first experiment finds systematic underestimation of learning, even after multiple rounds of performance feedback. Replicating earlier findings by psychologists, we observe an abrupt drop in confidence, from overconfidence to underconfidence, following initial task experience. The second experiment shows that underpredicting learning leads decision makers to make choices that lower average payoffs.
Owls, larks, or investment sharks? The role of circadian process in early-stage investment decisions
Cristiano Guarana et al.
Journal of Business Venturing, forthcoming
Abstract:
Investors in early-stage companies want to detect and select high-potential opportunities to maximize their long-term returns. However, in uncertain and risky early-stage investment contexts, company information is often opaque, and decision-making timeframes are compressed. Although there is an abundance of prior work on how investors make structured decisions based on their experience and expertise, there is a very limited understanding of how time-based factors can sway investment decisions. The circadian process is the 24-hour sequence that serves as an individual's internal timer influencing not only sleep cycles, but also attention and performance on a wide range of cognitive tasks. Understanding how the circadian process impacts early-stage investment holds implications for optimal investment decisions. We build on social cognitive theory and propose that investor-level factors (i.e., chronotypes) and environmental factors (time of the day) interact to influence the amount of information investors search for, and consequently, their investment decisions. We hypothesize and find that investors are influenced by the time of day they make early-stage investment decisions. Lark investors make better investment decisions in the morning, whereas owl investors make better decisions in the evening. Information search effort mediates this relationship.
It's the Effort that Counts: Exerting Self-Control Biases Goal Progress Perceptions
Marissa Sharif & Hoori Rafieian
University of Pennsylvania Working Paper, May 2021
Abstract:
Does how much self-control we exert influence how much goal progress we feel that we have made? In eight studies (N = 5,061), we demonstrate that consumers perceive that they have made more progress on their goals, and are motivated to further pursue the goal, if the identical goal-relevant task they completed required more (vs. less) self-control to complete. This is because consumers perceive they have put more effort towards their goal when they exert more (vs. less) self-control to complete a goal-relevant task. Relying on an effort-progress heuristic, consumers translate any perceived effort towards the goal to mean increased progress towards the goal. While this effort-progress heuristic can many times lead to accurate judgments of goal progress, we demonstrate that consumers misapply this heuristic when they exert more self-control effort, as this effort is irrelevant to goal progress.
Awe is associated with creative personality, convergent creativity, and everyday creativity
Jia Wei Zhang et al.
Psychology of Aesthetics, Creativity, and the Arts, forthcoming
Abstract:
Creativity has many benefits, such as workplace performance and life satisfaction. Three studies extended a small body of work to examine whether awe was associated with creative personality, convergent creativity, and everyday creative behaviors (N = 1,844). Study 1 demonstrated that trait awe was associated with a more creative personality among adolescents and adults in the U.S., Iran, and Malaysia. Study 2 showed that trait awe was associated with an increased likelihood of solving the Duncker's Candle Problem. Finally, Study 3 found that on days when participants felt more daily awe than they typically do, they reported having done more everyday creative activities. The effects of awe were independent of amusement (Studies 1-3) and Big Five personality (Study 3). Moreover, we found that daily curiosity explained the link between daily awe and daily creativity in Study 3. These results are the first to demonstrate a consistent link between awe and complementary measures of creativity. The discussion focuses on the limitations of the present work as well as implications of the present results for future research on awe and creativity.
People Take More Risk When Their Prospects are Tied to Future States of The World
Berkeley Dietvorst & Lin Fei
University of Chicago Working Paper, November 2021
Abstract:
We propose that decisions under risk often generate a consequential outcome that has been overlooked in the literature - error. Specifically, when prospects are tied to future states of the world (e.g. win $5 if horse #6 wins the race), risky decisions necessitate selecting a future state of the world. As a result, choosing among prospects generates error - the difference between the chosen and realized future state of the world. In 7 studies (N = 5,187), we find that people systematically value error and that they take more risk when their decisions generate error. These results suggest that error is a missing component in current theories of decision making under risk and that failing to account for error can result in biases in these theories. We believe people's sensitivity to error has especially important implications for our understanding of real-world risk preferences because prospects in real-world decisions under risk are almost always tied to future states of the world.