Central Tendency of Decision Making under Uncertainty

Abstract

Studies on intuitive perceptual judgment have shown central tendency of judgment on a series of stimuli. In those studies, it is critical that the range of judgmental objects be restricted. Therefore in a restricted range of judgmental objects, judgment with prize is also expected to have central tendency, although it has not been examined to date. This paper examines central tendency of decision making under uncertainty which consists of probability and prize. The decision making problem is the choice between two alternatives on the basis of an event observed in the restricted range. The optimal decision criterion was simulated by using statistical decision theory, and the decision criterion by subjects was experimentally investigat ed. The analysis comparing the experimental result to the simulation result showed that the criterion decided by subjects had central tendency. As a factor of central tendency, score for outcomes, or loss function, was shown to play an important role.

Mapping numerical magnitudes along the right lines: Differentiating between scale and bias.

“…We found the presence of the central tendency, that is, a form of linear compression where small numbers in an interval are overestimated and large numbers are underestimated. This effect has been observed in diverse experimental settings (e.g., Huttenlocher, Hedges, & Duncan, 1991;Matthews & Stewart, 2009;Nakamura, 1987;Preston & Baratta, 1948;Sheth & Shimojo, 2001) and is likely to represent a general response bias under uncertainty. This view is supported by the findings in our study, showing that the responses were more randomly distributed for the participants with a stronger central tendency.…”