Conference Proceeding

It Happens Because I'm Watching It: The Effect of Observing an Uncertain Event on Probability Estimation

Attari, Amin, Chatterjee, Promothesh, Čabano, Frank

2017

Overview

Many of decisions that people make deal with assessing the probabilities of uncertain events. Because of the prevalence and importance of probability estimation, a large body of research has investigated different factors that can influence probability judgments. The findings show that people have biases in estimating the subjective probabilities of uncertain events. These biases can lead individuals to either overestimate or underestimate the subjective probabilities. Examples of these biases include anchoring, availability, and representativeness. Moreover, it has been shown that illusion of control is a bias that can lead individuals to overestimate the subjective probabilities. For instance, as a result of an illusory sense of control, people make larger bets when they roll the dice themselves, are less likely to trade their lottery ticket when they choose (vs. are given) the ticket numbers, and prefer higher speeds as a driver versus a passenger. Here, Cabano et al investigate whether observing the occurrence of an uncertain event affects probability estimation of that event.

• Publisher: Association for Consumer Research
• Subject: Decision making / Estimating techniques / Probability