The loss-bet paradox: Actuaries, accountants, and other numerate people rate numerically inferior gambles as superior

Psychologists have convincingly demonstrated that preferences are not always stable and, instead, are often "constructed" based on information available in the judgment or decision context. In 4 studies with experts (accountants and actuaries in Studies 1 and 2, respectively) and a diverse lay population (Studies 3 and 4), the evidence was consistent with the highly numerate being more likely than the less numerate to construct their preferences by rating a numerically inferior bet as superior (i.e., the bets effect). Thus, the effect generalizes beyond a college student sample, and preference construction differs by numeracy. Contrary to prior thinking about preference construction, however, high expertise and high ability (rather than low) consistently related to the paradoxical phenomenon. Results across studies including Study 3's experimental modifications of the task supported the hypothesized number comparison process (and not a lack of expertise with monetary outcomes and probabilities or numeracy-related differences in attention to numbers) as the effect's underlying cause. The bets effect was not attenuated by Study 4's instructions to think about what would be purchased with bet winnings. Task results combined with free-response coding supported the notion that highly numerate participants have a systematic and persistent inclination for doing simple and complex number operations that drive their judgments (even after controlling for nonnumeric intelligence). Implications for 3 types of dual-process theories are discussed. The results were inconsistent with default-interventionist theories, consistent or unclear with respect to fuzzy trace theory, and consistent with interactive theories.

Scale Effects in Moral Relevance Assessment

Research on moral judgment often employs bipolar rating scales to assess whether the difference between two contrasted options is judged to be morally relevant. We give an account of how different numbers of response options provided on such scales (odd vs. even) change the meaning of the test question by communicating different implicit presuppositions. We demonstrate experimentally that these changes can qualitatively affect the moral relevance judgments that subjects express in response to a given judgment problem. Several alternative explanations in terms of trivial measurement distortion are tested and refuted, and we present suggestive evidence as to what kind of factors might be prone to scale effects. The findings underscore that expressed moral judgments are constructed ad hoc and do not necessarily reflect the content of underlying stable moral commitments. We discuss implications for theories and methodology in moral psychology and in judgment and decision-making research more generally.

Serial-position effects in preference construction: a sensitivity analysis of the pairwise-competition model

People have a stronger preference for options encountered earlier or later in a sequence than for options in the middle of the sequence. To account for these primacy and recency effects, Mantonakis et al. (2009) sketched a sequential updating mechanism, the pairwise-competition model. We propose a formal instantiation of the model and, using computer simulations, examine how the sizes of the predicted primacy and recency effects are affected by (a) variability in the quality of the options; (b) the number of options presented (sequence length); (c) the level of choice inertia (i.e., the tendency to stick with the current favorite); and (d) whether choice inertia dynamically increases over the sequence. We find that recency effects are reduced and primacy effects are increased with variability in quality as compared to without, and that this holds regardless of sequence length. A sizeable primacy effect occurs only with relatively short sequences or rather high levels of choice inertia. Dynamic inertia increases primacy effects and reduces recency effects, and the impact increases with higher inertia levels. We relate these results to empirical findings and derive novel predictions from the model.