Distortion of probability and outcome information in risky decisions

Eliciting Risk Perceptions: Does Conditional Question Wording Have a Downside?

BACKGROUND

To assess the impact of risk perceptions on prevention efforts or behavior change, best practices involve conditional risk measures, which ask people to estimate their risk contingent on a course of action (e.g., "if not vaccinated").

PURPOSE

To determine whether the use of conditional wording-and its drawing of attention to one specific contingency-has an important downside that could lead researchers to overestimate the true relationship between perceptions of risk and intended prevention behavior.

METHODS

In an online experiment, US participants from Amazon's MTurk (N = 750) were presented with information about an unfamiliar fungal disease and then randomly assigned among 3 conditions. In all conditions, participants were asked to estimate their risk for the disease (i.e., subjective likelihood) and to decide whether they would get vaccinated. In 2 conditional-wording conditions (1 of which involved a delayed decision), participants were asked about their risk if they did not get vaccinated. For an unconditional/benchmark condition, this conditional was not explicitly stated but was still formally applicable because participants had not yet been informed that a vaccine was even available for this disease.

RESULTS

When people gave risk estimates to a conditionally worded risk question after making a decision, the observed relationship between perceived risk and prevention decisions was inflated (relative to in the unconditional/benchmark condition).

CONCLUSIONS

The use of conditionals in risk questions can lead to overestimates of the impact of perceived risk on prevention decisions but not necessarily to a degree that should call for their omission.

HIGHLIGHTS

Conditional wording, which is commonly recommended for eliciting risk perceptions, has a potential downside.It can produce overestimates of the true relationship between perceived risk and prevention behavior, as established in the current work.Though concerning, the biasing effect of conditional wording was small-relative to the measurement benefits that conditioning usually provides-and should not deter researchers from conditioning risk perceptions.More research is needed to determine when the biasing impact of conditional wording is strongest.

The Effects of Power on Consumer Decision Strategies: The Mediating Role of Behavioral Approach-Inhibition Tendency and the Moderating Role of Gender

Purpose

Previous studies on consumer decision strategies have focused on the process or outcomes of decision-making using different decision strategies. Relatively little is known about the factors (especially decision makers' characteristics) influencing the use of different decision strategies. This study examined the effects of power on consumer decision strategies and the underlying mechanisms.

Methods

Studies 1 (N = 128) and 2 (N = 130) examined multiple- and binary-option situations, respectively. Participants' power was manipulated with a writing task and their consumer decision strategies were assessed through the selection tasks of restaurants and beach resorts. Study 3 (N = 326) further explored the mediator of approach-inhibition tendency and the moderator of gender in the relationship between power and consumer decision strategies. Participants' chronic sense of power, approach-inhibition tendency, and purchasing strategies were measured using questionnaires.

Results

Powerful (vs powerless) individuals prefer to use a direct selection (vs exclusion) strategy, regardless of whether they face multiple or binary choices. An increased approach (vs inhibition) tendency explains why elevated power promotes the use of the direct selection strategy. Moreover, gender plays a moderating role. Specifically, the mediation effect of approach (vs inhibition) tendency on the relationship between power and the preference for the direct selection (vs exclusion) strategy is stronger for males than for females.

Conclusion

This study extends previous research on power and consumer decision strategies by clarifying that the effects of power on consumer decision strategies are primarily driven by high power (but not by low power). Furthermore, by examining the mediator of approach-inhibition tendency and the moderator of gender, this study promotes a deeper understanding of how power affects consumer decision strategies and for whom the effect is more salient. Besides, the present research has contributions to the approach-inhibition theory of power and the literature on gender differences in consumer behavior, and has practical implications for business marketing.

Ex ante coherence shifts

Cushman characterizes rationalization as the inverse of rational reasoning, but this distinction is psychologically questionable. Coherence-based reasoning highlights a subtler form of bidirectionality: By distorting task attributes to make one course of action appear superior to its rivals, a patina of rationality is bestowed on the choice. This mechanism drives choice and action, rather than just following in their wake.

Bayesian Revision vs. Information Distortion

The rational status of the Bayesian calculus for revising likelihoods is compromised by the common but still unfamiliar phenomenon of information distortion. This bias is the distortion in the evaluation of a new datum toward favoring the currently preferred option in a decision or judgment. While the Bayesian calculus requires the independent combination of the prior probability and a new datum, information distortion invalidates such independence (because the prior influences the datum). Although widespread, information distortion has not generally been recognized. First, individuals are not aware when they themselves commit this bias. In addition, it is often hidden in more obvious suboptimal phenomena. Finally, the Bayesian calculus is usually explained only with undistortable data like colored balls drawn randomly. Partly because information distortion is unrecognized by the individuals exhibiting it, no way has been devised for eliminating it. Partial reduction is possible in some situations such as presenting all data simultaneously rather than sequentially with revision after each datum. The potential dangers of information distortion are illustrated for three professional revision tasks: forecasting, predicting consumer choices from internet data, and statistical inference from experimental results. The optimality of the Bayesian calculus competes with people's natural desire that their belief systems remain coherent in the face of new data. Information distortion provides this coherence by biasing those data toward greater agreement with the currently preferred position—but at the cost of Bayesian optimality.

What You Find Depends on How You Measure It: Reactivity of Response Scales Measuring Predecisional Information Distortion in Medical Diagnosis

“Predecisional information distortion” occurs when decision makers evaluate new information in a way that is biased towards their leading option. The phenomenon is well established, as is the method typically used to measure it, termed “stepwise evolution of preference” (SEP). An inadequacy of this method has recently come to the fore: it measures distortion as the total advantage afforded a leading option over its competitor, and therefore it cannot differentiate between distortion to strengthen a leading option (“proleader” distortion) and distortion to weaken a trailing option (“antitrailer” distortion). To address this, recent research introduced new response scales to SEP. We explore whether and how these new response scales might influence the very proleader and antitrailer processes that they were designed to capture (“reactivity”). We used the SEP method with concurrent verbal reporting: fifty family physicians verbalized their thoughts as they evaluated patient symptoms and signs (“cues”) in relation to two competing diagnostic hypotheses. Twenty-five physicians evaluated each cue using the response scale traditional to SEP (a single response scale, returning a single measure of distortion); the other twenty-five did so using the response scales introduced in recent studies (two separate response scales, returning two separate measures of distortion: proleader and antitrailer). We measured proleader and antitrailer processes in verbalizations, and compared verbalizations in the single-scale and separate-scales groups. Response scales did not appear to affect proleader processes: the two groups of physicians were equally likely to bolster their leading diagnosis verbally. Response scales did, however, appear to affect antitrailer processes: the two groups denigrated their trailing diagnosis verbally to differing degrees. Our findings suggest that the response scales used to measure information distortion might influence its constituent processes, limiting their generalizability across and beyond experimental studies.

Predecisional Information Distortion and the Self-Fulfilling Prophecy of Early Preferences in Choice

When a decision maker begins to favor a particular choice option, this tentative preference often shifts the evaluation of subsequent information in a manner that benefits the early leader. This ubiquitous bias, called predecisional information distortion, can create a form of self-fulfilling prophecy in which the decision maker is especially likely to choose the initially preferred option. Recent evidence has indicated that information distortion occurs in risky choices as well as riskless choices, that distortion also occurs in choices with more than two options, and that distortion can both enhance the leading option and degrade the trailing option(s). The effects of information distortion on choice and related variables are often sizable and cannot be attributed to individual differences in people’s “undistorted” assessments of the information. Although several issues are not yet resolved, incorporating information distortion into theories and models of the choice process should be a high priority for decision science.

Predecisional information distortion in physicians’ diagnostic judgments: Strengthening a leading hypothesis or weakening its competitor?

Decision makers have been found to bias their interpretation of incoming information to support an emerging judgment (predecisional information distortion). This is a robust finding in human judgment, and was recently also established and measured in physicians’ diagnostic judgments (Kostopoulou et al. 2012). The two studies reported here extend this work by addressing the constituent modes of distortion in physicians. Specifically, we studied whether and to what extent physicians distort information to strengthen their leading diagnosis and/or to weaken a competing diagnosis. We used the “stepwise evolution of preference” method with three clinical scenarios, and measured distortion on separate rating scales, one for each of the two competing diagnoses per scenario.

In Study 1, distortion in an experimental group was measured against the responses of a separate control group. In Study 2, distortion in a new experimental group was measured against participants’ own, personal responses provided under control conditions, with the two response conditions separated by a month. The two studies produced consistent results. On average, we found considerable distortion of information to weaken the trailing diagnosis but little distortion to strengthen the leading diagnosis. We also found individual differences in the tendency to engage in either mode of distortion. Given that two recent studies found both modes of distortion in lay preference (Blanchard, Carlson & Meloy, 2014; DeKay, Miller, Schley & Erford, 2014), we suggest that predecisional information distortion is affected by participant and task characteristics. Our findings contribute to the growing research on the different modes of predecisional distortion and their stability to methodological variation.

When can scientific studies promote consensus among conflicting stakeholders?

While scientific studies may help conflicting stakeholders come to agreement on a best management option or policy, often they do not. We review the factors affecting trust in the efficacy and objectivity of scientific studies in an analytical-deliberative process where conflict is present, and show how they may be incorporated in an extension to the traditional Bayesian decision model. The extended framework considers stakeholders who differ in their prior beliefs regarding the probability of possible outcomes (in particular, whether a proposed technology is hazardous), differ in their valuations of these outcomes, and differ in their assessment of the ability of a proposed study to resolve the uncertainty in the outcomes and their hazards--as measured by their perceived false positive and false negative rates for the study. The Bayesian model predicts stakeholder-specific preposterior probabilities of consensus, as well as pathways for increasing these probabilities, providing important insights into the value of scientific information in an analytic-deliberative decision process where agreement is sought. It also helps to identify the interactions among perceived risk and benefit allocations, scientific beliefs, and trust in proposed scientific studies when determining whether a consensus can be achieved. The article provides examples to illustrate the method, including an adaptation of a recent decision analysis for managing the health risks of electromagnetic fields from high voltage transmission lines.

Cognitive integration of recognition information and additional cues in memory-based decisions

Glöckner and Bröder (2011) have shown that for 77.5% of their participants’ decision making behavior in decisions involving recognition information and explicitly provided additional cues could be better described by weighted-compensatory Parallel Constraint Satisfaction (PCS) Models than by non-compensatory strategies such as recognition heuristic (RH) or Take the Best (TTB). We investigate whether this predominance of PCS models also holds in memory-based decisions in which information retrieval is effortful and cognitively demanding. Decision strategies were analyzed using a maximum-likelihood strategy classification method, taking into account choices, response times and confidence ratings simultaneously. In contrast to the memory-based-RH hypothesis, results show that also in memory-based decisions for 62% of the participants behavior is best explained by a compensatory PCS model. There is, however, a slight increase in participants classified as users of the non-compensatory strategies RH and TTB (32%) compared to the previous study, mirroring other studies suggesting effects of costly retrieval.

Assessing the sensitivity of information distortion to four potential influences in studies of risky choice

The emergence of a leading alternative during the course of a decision is known to bias the evaluation of new information in a manner that favors that alternative. We report 3 studies that address the sensitivity of predecisional information distortion and its effects in hypothetical risky decisions with regard to 4 potential influences: choice domain, repeated choice, memory requirements, and intermediate progress questions. In Experiment 1 (N = 515), the magnitude of information distortion was similar in 5 choice domains (varied between participants) involving monetary gambles, song downloads, frequent-flyer miles, political decisions, or medical decisions. Information distortion mediated the relationship between our manipulation of initial preferences and participants’ final choices, with the magnitude of the indirect effect being roughly similar across domains. These results replicate and extend previous findings. Additionally, distortion decreased significantly over 4 similar decision problems (within participants), but remained significant in the fourth problem. In Experiment 2 (N = 214), information distortion increased significantly when previously viewed information remained available, apparently because reiterating that information strengthened emerging preferences. In Experiment 3 (N = 223), the removal of intermediate progress questions that measure information distortion and emerging preferences did not significantly affect final choices, again replicating previous results. We conclude that predecisional information distortion is a relatively stable and robust phenomenon that deserves a prominent role in descriptive theories of choice.

Preference-driven biases in decision makers’ information search and evaluation

While it is well established that the search for information after a decision is biased toward supporting that decision, the case of preference-supporting search before the decision remains open. Three studies of consumer choices consistently found a complete absence of a pre-choice bias toward searching for preference-supporting information. The absence of this confirming search bias occurred for products that were both hedonic and utilitarian, both expensive and inexpensive, and both high and low in expected brand loyalty. Experiment 3 also verified the presence of the expected post-choice search bias to support the chosen alternative. Therefore the absence of a pre-choice search bias in all three studies was not likely to be due to our using a method that was so insensitive that a search bias would not be observed under any circumstances. In addition to the absence of an effect of prior preferences on information selection, subjects’ self-reported search strategies exhibited a clear tendency toward a balance of positive and negative information. Across the three studies, we also tested for the presence of a preference-supporting bias in the evaluation of the information acquired in the search process. This evaluation bias was found both pre- and post-choice.

Information Distortion in Physicians’ Diagnostic Judgments

Background: Information distortion suggests that people change the evaluation of new information to support an emerging belief. The present study was designed to measure the extent to which physicians distort incoming medical information to support an emerging diagnosis. Design: Data were collected via an anonymous questionnaire. The experimental group (102 physicians) read 3 patient scenarios, each with 2 competing diagnoses. Physicians first read information that favored 1 of the 2 diagnoses (the “steer”). They then rated a series of neutral cues that favored neither diagnosis. At each cue presentation, respondents rated the extent to which cues favored either diagnosis and updated the strength of their diagnostic belief. After the neutral cues in the third scenario, respondents rated cues that opposed the initial steer. A control group (36 physicians) rated all the cues in random order and not within scenarios, thus providing unbiased baseline ratings for calculating distortion in the experimental group. Results: Distortion was statistically significant ( P < 0.001) and was associated with the strength of belief in the leading diagnosis. Physicians with over 10 years in practice distorted less than their less experienced counterparts ([Formula: see text] = 1.04 v. [Formula: see text] = 1.78, P < 0.05). Having developed an initial diagnostic leaning consistent with the steer, 56% of physicians remained committed to it after receiving the conflicting cues. Distortion was strongly associated with commitment to the steer (odds ratio, 1.4; 95% confidence interval, 1.03–1.79; P = 0.03). Limitations: Physicians did not elicit information; therefore, the authors cannot estimate the size of distortion in tasks involving information search. Conclusions: Distortion could partly explain commitment of physicians to an early diagnosis. Both distortion and strength of initial diagnostic belief seem to decline after 10 years in family medicine.

Decisions beyond boundaries: when more information is processed faster than less

Bounded rationality models usually converge in claiming that decision time and the amount of computational steps needed to come to a decision are positively correlated. The empirical evidence for this claim is, however, equivocal. We conducted a study that tests this claim by adding and omitting information. We demonstrate that even an increase in information amount can yield a decrease in decision time if the added information increases coherence in the information set. Rather than being influenced by amount of information, decision time systematically increased with decreasing coherence. The results are discussed with reference to a parallel constraint satisfaction approach to decision making, which assumes that information integration is operated in an automatic, holistic manner.

The empirical content of theories in judgment and decision making: Shortcomings and remedies

According to Karl Popper, we can tell good theories from poor ones by assessing their empirical content (empirischer Gehalt), which basically reflects how much information they convey concerning the world. “The empirical content of a statement increases with its degree of falsifiability: the more a statement forbids, the more it says about the world of experience.” Two criteria to evaluate the empirical content of a theory are their level of universality (Allgemeinheit) and their degree of precision (Bestimmtheit). The former specifies how many situations it can be applied to. The latter refers to the specificity in prediction, that is, how many subclasses of realizations it allows. We conduct an analysis of the empirical content of theories in Judgment and Decision Making (JDM) and identify the challenges in theory formulation for different classes of models. Elaborating on classic Popperian ideas, we suggest some guidelines for publication of theoretical work.

Parallel Constraint Satisfaction in Memory-Based Decisions

Three studies sought to investigate decision strategies in memory-based decisions and to test the predictions of the parallel constraint satisfaction (PCS) model for decision making (Glöckner & Betsch, 2008). Time pressure was manipulated and the model was compared against simple heuristics (take the best and equal weight) and a weighted additive strategy. From PCS we predicted that fast intuitive decision making is based on compensatory information integration and that decision time increases and confidence decreases with increasing inconsistency in the decision task. In line with these predictions we observed a predominant usage of compensatory strategies under all time-pressure conditions and even with decision times as short as 1.7 s. For a substantial number of participants, choices and decision times were best explained by PCS, but there was also evidence for use of simple heuristics. The time-pressure manipulation did not significantly affect decision strategies. Overall, the results highlight intuitive, automatic processes in decision making and support the idea that human information-processing capabilities are less severely bounded than often assumed.

Are Medical Outcomes Fungible? A Survey of Voters, Medical Administrators, and Physicians

Purpose. Many analyses of medical treatments entail the aggregation of health outcomes over patients and over time. This study assessed the extent to which voters, medical administrators, and physicians consider such aggregation to be appropriate. In addition, the study assessed whether this perceived fungibility of outcomes moderates the difference between treatment recommendations in single-play decisions (for 1 patient on 1 occasion) and those in repeated-play decisions (for several patients or for 1 patient on several occasions). Methods. In a 5-contact mail survey of registered voters ( n = 182, response rate = 52%), medical administrators ( n = 123, 35%), and physicians ( n = 95, 26%), respondents rated the fungibility of outcomes and indicated their preferred action in 1 of 3 scenarios involving changes in life expectancy or the duration of pain. They evaluated a risky, positive-expected-value treatment in a single-play decision, then in a repeated-play decision, and again in a repeated-play decision after they viewed the distribution of possible net outcomes. Results. Perceived fungibility varied substantially across respondents in all groups, with voters giving higher fungibility ratings than administrators or physicians. Respondents’ strength-of-preference ratings for treatment increased from single-play to repeated-play decisions, but these increases were moderated by perceived fungibility, as expected. When outcomes were considered fungible, treatments were much more attractive in repeated-play decisions than in single-play decisions. When outcomes were considered nonfungible, there was essentially no difference between single- and repeated-play decisions. Conclusions. Recommendations regarding risky medical treatments with positive expectations appear to depend, in part, on opinions about whether it is reasonable to aggregate medical outcomes over patients or over time. Such opinions vary widely among physicians and others.

Processing of recognition information and additional cues: A model-based analysis of choice, confidence, and response time

Research on the processing of recognition information has focused on testing the recognition heuristic (RH). On the aggregate, the noncompensatory use of recognition information postulated by the RH was rejected in several studies, while RH could still account for a considerable proportion of choices. These results can be explained if either a) a part of the subjects used RH or b) nobody used it but its choice predictions were accidentally in line with predictions of the strategy used. In the current study, which exemplifies a new approach to model testing, we determined individuals’ decision strategies based on a maximum-likelihood classification method, taking into account choices, response times and confidence ratings simultaneously. Unlike most previous studies of the RH, our study tested the RH under conditions in which we provided information about cue values of unrecognized objects (which we argue is fairly common and thus of some interest). For 77.5% of the subjects, overall behavior was best explained by a compensatory parallel constraint satisfaction (PCS) strategy. The proportion of subjects using an enhanced RH heuristic (RHe) was negligible (up to 7.5%); 15% of the subjects seemed to use a take the best strategy (TTB). A more-fine grained analysis of the supplemental behavioral parameters conditional on strategy use supports PCS but calls into question process assumptions for apparent users of RH, RHe, and TTB within our experimental context. Our results are consistent with previous literature highlighting the importance of individual strategy classification as compared to aggregated analyses.