J. Frank Yates

Psychological sources of ambiguity avoidance

Ambiguity is characterized as uncertainty about the probabilities with which outcomes can occur. Previous research has established that subjects, when given a choice between two options differing in their degree of ambiguity, tend to prefer the less ambiguous option, exhibiting ambiguity avoidance. The present paper addresses the psychological sources of this behavior. Five plausible hypotheses for the basis of ambiguity avoidance were extracted from the literature, along with a sixth proposal which questioned the deliberateness of the behavior. None of the hypotheses had previously been sufficiently examined empirically. In a series of five experiments, each of the proposed explanations of ambiguity avoidance was tested. Of the six, only one, termed “other-evaluation,” had an effect on subjects’ choice behavior in an ambiguous situation involving monetary lotteries. The other-evaluation hypothesis states that a decision maker, in making a choice, anticipates that others will evaluate his or her decision; and, so, makes the choice that is perceived to be most justifiable to others. This choice is for the option having the smallest degree of ambiguity. It is concluded that the other-evaluation hypothesis offers the most promising direction for future research regarding the psychology of choice under ambiguity. 0 1986 Academic press, Inc.

The center and range of the probability interval as factors affecting ambiguity preferences

Abstract Ambiguous decision situations are characterized as having probabilities that are uncertain. The uncertainty is due to the common, real-world deficiency of information about the process by which the outcomes are determined. Thirty lotteries having uncertain probabilities were constructed by varying the centers and the ranges of the intervals within which the imprecise probabilities of winning could lie. Pairs of the lotteries were presented as choice alternatives to subjects, with each pair having lotteries with the same interval center but differing interval ranges. Ambiguity avoidance, the selection of the less ambiguous option, was found to increase with the interval center C , with ambiguity indifference occurring for values of C ⩽ 0.40. No evidence of ambiguity seeking as the prevalent behavior was obtained. Ambiguity avoidance did not significantly increase with the interval range R , but an interaction effect between C and the ranges R 1 and R 2 of the choice pair was obtained. This effect of the ranges could not be described simply by knowledge of the difference R 1 − R 2 ; knowledge of both individual values was necessary. The theoretical implications of these results are discussed.

Foreground:background salience: Explaining the effects of graphical displays on risk avoidance

Abstract The purpose of this research was to determine the mechanisms underlying the graphical effect identified by Stone, Yates, and Parker (1997) , in which graphical formats for conveying risk information are more effective than numerical formats for increasing risk-avoidant behavior. Two experiments tested whether this graphical effect occurred because the graphical formats used by Stone et al. highlighted the number of people harmed by the focal hazard, causing the decisions to be based mainly on the number of people harmed (which we label the “foreground”) at the expense of the total number of people at risk of harm (which we call the “background”). Specifically, two graphical formats were developed that displayed pictorially both the number of people harmed and the total number at risk, and use of these display formats eliminated the graphical effect. We thus propose that the previously discussed graphical effect was in fact a manifestation of a more general foreground:background salience effect, whereby displays that highlight the number of people harmed at the expense of the total number of people at risk of harm lead to greater risk avoidance. Theoretical and practical implications are discussed.

An empirical evaluation of descriptive models of ambiguity reactions in choice situations

Ambiguity is uncertainty about an option’s outcome-generating process, and is characterized as uncertainty about an option’s outcome probabilities. Subjects, in choice tasks, typically have avoided ambiguous options. Descriptive models are identified and tested in two studies which had subjects rank monetary lotteries according to preference. In Study 1, lotteries involved receiving a positive amount or nothing, where P denotes the probability of receiving the nonzero amount. Subjects were willing to forego expected winnings to avoid ambiguity near P = SO and P = .75. Near P = .25, a significant percentage of subjects exhibited ambiguity seeking, with subjects, on average, willing to forego expected winnings to have the more ambiguous option. The observed behavior contradicts the viability of a proposed lexicographic model. Study 2 tested four polynomial models using diagnostic properties in the context of conjoint measurement theory. The results supported a sign dependence of ambiguity with respect to the probability level P, such that subjects’ preference orderings over ambiguity reversed with changes in P. This behavior was inconsistent with all the three-factor polynomial models investigated. Further analyses failed to support a variant of portfolio theory, as well. The implications of these results for the descriptive modeling of choice under ambiguity are discussed. 0 1989 Academic Press, Inc. Suppose you feel stiffness and pain in your legs after walking several blocks. At the clinic, you are informed of two available treatments, Treatment A and Treatment B. You describe your choice, as to which treatment to accept, if either, by the tree structure shown in Fig. 1. The structure captures your beliefs that the possible outcomes at least partly depend upon your choice, and that the outcomes are uncertain. These features are components of most decision models under uncertainty that have been proposed. Your next step could be to use probabilities, indicated on the tree in Fig. 1, as subjective measures of your uncertainty about the chances that each treatment will be successful. A decision analysis would proceed in this fashion (Weinstein

Conjunction errors: Evidence for multiple judgment procedures, including "signed summation"

A conjunction error is a judgment that a conjunctive event is more likely than one of the marginal events comprising the conjunction. Previous research has demonstrated conjunction errors in situations in which marginal events arose from a common generating process. In Studies 1-3, conjunction errors were reliably induced in cases where marginal events resulted from unrelated processes. This suggests that conjunction errors can be produced by “formalistic” judgment procedures, by which probability judgments for conjunctions are derived from probability judgments for marginal events according to some combination rule. Protocols from Studies 2 and 3 also indicated that subjects use multiple judgment procedures, several of which are capable of yielding conjunction errors. One new procedure suggested by the protocols is formalized in a “signed sum model.” In this model, an event’s likelihood is represented by a positive number, a negative number, or zero, depending on whether the event is considered likely, unlikely, or neither, respectively. The likelihood value for a conjunction is the sum of those for the constituent marginal events. In Study 4, this model successfully predicted when some sub

Judgmental overshadowing: Further evidence of cue interaction in contingency judgment

We investigated a phenomenon calledjudgmental overshadowing. Subjects predicted whether each of several patients had a disease on the basis of whether or not the patient had each of two symptoms. For all the subjects, the presence of the disease was moderately contingent on the presence of one ofthe symptoms (S1). In Condition 1 of our first experiment, the presence of the disease was highly contingent on the presence of the other symptom (S2). In Condition 2, the presence of the disease was independent of S2. Judgmental overshadowing occurred in that the S1-disease contingency was judged to be stronger in Condition 2 than in Condition 1. Subsequent experiments showed that judgmental overshadowing depends little on the form of the judgment, is not due to a response bias or contrast effect, and does not depend on subjects’ actively diagnosing each patient. These results are consistent with, and are generally predicted by, an associative-learning model of contingency judgment.

CONTINGENCY JUDGMENT: PRIMACY EFFECTS AND ATTENTION DECREMENT *

Subjects made judgments concerning the strength and direction of the contingency between two dichotomous variables in a situation in which no contingency actually existed. The judgments exhibited a significant primacy effect. The effects of warning and not warning the subjects that they would be required to recall the frequencies of observed event co-occurrences implied that this primacy effect was due to ‘attention decrement’ (Anderson 1981). According to this hypothesis, attention to contingency-relevant information diminishes after the subject is exposed to only a small portion of the available information.

Risk avoidance: Graphs versus numbers

There have long been speculations that graphical and numerical presentations of risk statistics differ in their impact on people’s willingness to pursue actions that could harm or even kill them. But research has been unclear about the processes whereby the pictorial character of graphical displays per se might affect those risky decisions or even whether such effects actually occur. In two studies, we demonstrate that the pictorial nature of a graphical risk display can, indeed, increase risk avoidance. This increase is associated with a heightened impression of the riskiness of less safe alternatives. The results suggest that this picture-driven, intensified sense of riskiness, in turn, rests on two kinds of mechanisms: one cognitive, the other affective. Cognitively, pictorial presentations impose weaker upper bounds on people’s internal representations of the chances that riskier alternatives will bring about actual harm. Affectively, pictures ignite stronger, more aversive negative associations with riskier options and their outcomes.

Good probabilistic forecasters: The 'consumer's' perspective

Abstract There is an established literature describing how probabilistic forecasts, and hence forecasters, should be evaluated. The present paper takes a different and heretofore neglected perspective on evaluation. It addresses how those who receive and use probabilistic predictions—forecast ‘consumers’—appraise these assessments. Results indicate that there are reliable and important differences between subjective and formal evaluation principles. Among the distinctive features of common subjective appraisal strategies are: (a) an emphasis on judgments being categorically ‘correct’; (b) special attention to forecast extremeness; (c) the desire for good explanations of forecasts; and (d) the sensitivity of appraisals to how pertinent information is displayed to the evaluator. Theoretical and practical implications are discussed.

Preferences for Deferred Losses

Abstract The question of whether aversive outcomes are generally preferred at sooner or at later times in the future is examined. Theories predicting choices of advanced and deferred aversive outcomes are summarized. A previous result suggesting overwhelming preference for more immediate aversive outcomes is challenged on the basis of problems endemic to experimental studies of decision making. An experiment that attempted to circumvent those problems is described. Subjects chose between sums of money that could be lost at various times in the future. The subjects were evenly divided in their preferences for advanced and deferred losses. Subjects in a control condition duplicated the results of the previous experiment that had demonstrated the predominance of preferences for advanced aversive outcomes. The implications of the conclusions for a representation of choice over deferred outcomes are discussed.