The ratio bias refers to the tendency of individuals to judge probabilities expressed as ratios of large numbers as more likely than equivalent or even higher probabilities expressed as a ratio of small numbers. For example, the ratio bias effect occurs when a lottery offering a 9/100 chance of winning is preferred over a lottery that offers a 1/10 chance of winning. Although previous empirical research has found evidence for the ratio bias, the exact conditions under which this effect occurs are still unclear and there is a lack of rigor in distinguishing the ratio bias from other similar effects. In this article, besides providing a comprehensive and integrative literature review, we present the results of an experiment in which we extend previous research on the ratio bias by comparing deviations both in favor of low-and high-number alternatives, as well as allowing for indifference. Results indicate that a systematic deviation in favor of high-number alternatives does exist, but that the ratio bias must be clearly distinguished from a general tendency to indicate indifference. Concerning characteristics of the problem and the decision maker, we find significant influences of probability levels involved (the ratio bias occurs more frequently for low probabilities), and of gender (the bias occurs more often among female subjects).

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The ratio bias refers to decision makers' propensity to overestimate probabilities that are specified as ratios of large numbers in comparison to a ratio of smaller numbers (e.g., 9:100 vs. 1:10). To reconcile conflicting findings about this bias, we study such deviations in a more general setting allowing for deviations in both directions, irrational indifference, and inability to decide. We find that the predominant direction of deviations depends on the probabilities involved and that there is no uniform bias in favor of high numbers across all settings. Our findings indicate a strong negative impact of risk literacy on all such bias phenomena. We also test the relationship of the ratio bias to rational/experiential system theory and find that, contrary to the theoretical predictions, biased responses tend to take longer time than logically correct answers.

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