How environmental regularities affect people’s information search in probability judgments from experience.

Abstract

In everyday life, people encounter smaller rewards with higher probability than larger rewards. Do people expect this reward-probability regularity to hold in experimental settings? To answer this question, we tested whether people's behavior in probability judgment tasks is affected by the correlation between reward size and reward probabilities. In Study 1, we asked people to judge reward probabilities under uncertainty. In line with the ecological reward-probability correlation, people assumed that larger rewards were less likely than smaller rewards. In Study 2, we tested the prediction that people's information search and integration depend on the representativeness of the environment. Participants performed an experience-based probability judgment task in which they sampled outcomes from unknown gambles until they felt confident to estimate the probabilities of the gambles' outcomes. We manipulated the reward-probability relationship of the gambles in 3 experimental groups. Rewards and reward probabilities were negatively correlated, positively correlated, or not correlated at all. A negative correlation mimics the ecological reward-probability relationship often present in real life. We analyzed people's search effort and whether they integrated sample-based uncertainty into their judgments. We found that people sampled fewer outcomes in the ecologically representative condition than in the other 2 conditions. However, people did not integrate sample-based uncertainty in their judgments: In all conditions people treated the observed outcomes as representative of the underlying outcome distribution. People's prior beliefs about regularities in environments provides a potential explanation of why people often rely on small sample sizes when making judgments and decisions from experience. (PsycINFO Database Record

Do people exploit risk–reward structures to simplify information processing in risky choice?

“…Specifically, they enlist the risk-reward heuristic to infer unknown probabilities from the magnitude of the payoffs (Leuker et al 2018;Pleskac and Hertwig 2014), and, vice versa, also to infer payoffs from probabilities (Skylark and Prabhu-Naik 2018). Moreover, in decisions from experience people have been shown to sample less information about possible outcome distributions in decisions from experience (Hertwig 2015) when a choice environment displays the typically negative relationship between risks and rewards compared to when risks and rewards are positively related, or uncorrelated (Hoffart et al 2018).…”

Do People Exploit Risk–Reward Structures To Simplify Information Processing in Risky Choice?

“…Specifically, they enlist the risk-reward heuristic to infer unknown probabilities from the magnitude of the payoffs (Leuker et al, 2018;Pleskac & Hertwig, 2014), and, vice versa, also to infer payoffs from probabilities (Skylark & Prabhu-Naik, 2018). Moreover, in decisions from experience people have been shown to sample less information about possible outcome distributions in decisions from experience (Hertwig, 2015) when a choice environment displays the typically negative relationship between risks and rewards compared to when risks and rewards are positively related, or uncorrelated (Hoffart et al, 2018).…”

Too Good to Be True? Psychological Responses to Uncommon Options in Risk–Reward Environments

“…In decisions under uncertainty, people exploit the risk-reward relationship to infer the probabilities from the magnitude of the payoffs (Leuker et al, 2018;Pleskac & Hertwig, 2014). They may also use the relationship to infer payoffs from probabilities (Skylark & Prabhu-Naik, 2018), or to decide how often they sample in decisions from experience (Hoffart et al, 2018). In contrast to earlier research, our focus in the present article is on decisions under risk-that is, decisions in which both payoffs and probabilities are explicitly stated.…”