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Super‐Underweighting of Rare Events with Repeated Descriptive Summaries
Author(s) -
Yechiam Eldad,
Rakow Tim,
Newell Ben R.
Publication year - 2015
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.1829
Subject(s) - rare events , hazard , weighting , descriptive statistics , event (particle physics) , psychology , descriptive research , econometrics , actuarial science , computer science , statistics , cognitive psychology , medicine , economics , mathematics , chemistry , physics , organic chemistry , quantum mechanics , radiology
Field studies suggest that providing summarized information concerning the prevalence of risks can increase risk taking when the hazard is rare. We study a simple experimental model of this phenomenon based on repeated descriptive summaries of past outcomes. Under cumulative prospect theory and experience‐sampling models, descriptions of rare events should increase the weighting of rare events. On the other hand, if individuals are sensitive to the frequency of events, then event summaries are expected to accentuate the underweighting of rare events despite adding descriptive information. These contrasting predictions were examined in three experiments using a multi‐alternative decision task with two sets of options: safe and risky. In all three experiments, repeated descriptive summaries of past outcomes from all alternatives or from a randomly drawn alternative were found to accentuate the underweighting of rare events by a similar amount. The results shed light on the role of frequency‐based judgments in the extreme underweighting of rare events and highlight that providing information about the incidence of rare hazards can have the unintended effect of increasing, rather than decreasing, people's propensity to take risks. Copyright © 2014 John Wiley & Sons, Ltd.