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Super-Underweighting of Rare Events with Repeated Descriptive Summaries

Yechiam, Eldad and Rakow, Tim and Newell, Ben R (2014) 'Super-Underweighting of Rare Events with Repeated Descriptive Summaries.' Journal of Behavioral Decision Making, 28 (1). pp. 67-75. ISSN 0894-3257

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Abstract

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.

Item Type: Article
Uncontrolled Keywords: decision making; risk preference; rare events; cumulative prospect theory; experience sampling; fuzzy trace theory; risk communication
Subjects: B Philosophy. Psychology. Religion > BF Psychology
Divisions: Faculty of Science and Health > Psychology, Department of
Depositing User: Jim Jamieson
Date Deposited: 04 Feb 2015 14:31
Last Modified: 04 Feb 2015 14:31
URI: http://repository.essex.ac.uk/id/eprint/12610

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