ABSTRACT
Do people's attitudes toward the (a)symmetry of an outcome distribution affect their choices? Financial investors seek return distributions with frequent small returns but few large ones, consistent with leading models of choice in economics and finance that assume right-skewed preferences. In contrast, many experiments in which decision-makers learn about choice options through experience find the opposite choice tendency, in favor of left-skewed options. To reconcile these seemingly contradicting findings, the present work investigates the effect of skewness on choices in experience-based decisions. Across seven studies, we show that apparent preferences for left-skewed outcome distributions are a consequence of those distributions having a higher value in most direct outcome comparisons, a "frequent-winner effect." By manipulating which option is the frequent winner, we show that choice tendencies for frequent winners can be obtained even with identical outcome distributions. Moreover, systematic choice tendencies in favor of right- or left-skewed options can be obtained by manipulating which option is experienced as the frequent winner. We also find evidence for an intrinsic preference for right-skewed outcome distributions. The frequent-winner phenomenon is robust to variations in outcome distributions and experimental paradigms. These findings are confirmed by computational analyses in which a reinforcement-learning model capturing frequent winning and intrinsic skewness preferences provides the best account of the data. Our work reconciles conflicting findings of aggregated behavior in financial markets and experiments and highlights the need for theories of decision-making sensitive to joint outcome distributions of the available options.
Subject(s)
Choice Behavior , Decision Making , Humans , Learning , Reinforcement, PsychologyABSTRACT
Reports an error in "Evaluating categories from experience: The simple averaging heuristic" by Thomas K. A. Woiczyk and Gaël Le Mens (Journal of Personality and Social Psychology, 2021[Oct], Vol 121[4], 747-773). There was an error in Figure 7. In the two plots of the second row, the data previously labeled as "Equal" correspond to "Natural" and the data previously labeled "Natural" correspond to "Equal." The online version of this article has been corrected. (The following abstract of the original article appeared in record 2021-89474-001.) We analyze how people form evaluative judgments about categories based on their experiences with category members. Prior research suggests that such evaluative judgments depend on some experience average but is unclear about the specific kind of average. We hypothesized that evaluations of categories could be driven either by the simple average of experiences with the category or by the member average (the average of the evaluations of the category members, where the evaluation of a category member is the average of experiences with this particular member). Understanding whether evaluations of categories are driven by the simple average or the member average is important in settings where people obtain unbalanced numbers of observations about category members such as when people form opinions about a social group and predominantly interact with just a few members of this group. Across nine studies (N = 1,966), we consistently found that evaluative judgments about categories were better explained by the simple average than by the member average. We call the underlying cognitive strategy the simple averaging heuristic. Collected evidence indicates that participants relied on simple averaging even in settings where normative principles required avoiding the use of this cognitive strategy, leading to systematic mistakes. Our findings contribute to several areas of social cognition such as research on redundancy biases, information aggregation, social sampling, and norm perceptions. (PsycInfo Database Record (c) 2024 APA, all rights reserved).