Cognitive heuristics - research

Question 1

Shiner (2015)

Answer 1

irreversible decisions seem to yield the most satisfaction

especially with satisficers - adequate decision - ‘that will do’ - can’t change it

optimisers tend to prefer reversible

may depend on individual differences

Question 2

Correia (2014)

Answer 2

Conclusions drawn from these results include

1) If you are a maximizer, you are more likely to feel regret after every purchase;
2) those who are maximizers are more likely to take steps in returning a product and voicing their dissatisfaction;
3) the younger you are, the more likely you are to be a maximizer;
4) the more power you feel you have in society, the more likely you are to be a maximizer.

Marketing managers should be aware of these findings when designing their customer service models

Question 3

Kannengiesser et al. (2019)

Answer 3

This paper analyses design protocols of professional engineers and engineering students using the FBS schema, testing two hypotheses related to the use of
system 1 and system 2 thinking. These two modes of thinking are characterised as: one that is fast and intuitive (system 1), and one that is slow and tedious (system 2). Their relevance for design thinking has already been shown conceptually. This paper provides empirical support for the existence of system 1 design thinking and system 2 design thinking.

The empirical results presented in this paper show that system 1 thinking is used in design and plays an important role based on its relative occurrence. It confirms previous observations and characterisations of design processes
that led to the formulation of Hypothesis H1, which stated that design thinking comprises system 1 and system 2 thinking. Further analyses of existing protocols or results from new experiments are needed to have robust support these two conclusions.

Question 4

Bago and De Neys (2019)

Answer 4

Influential work on reasoning and decision-making has popularised the idea that sound reasoning requires correction of fast, intuitive thought processes by slower and more demanding deliberation. We present seven studies that question this corrective view of human thinking. We focused on the very problem that has been widely featured as the paradigmatic illustration of the corrective view, the well-known bat-and-ball problem. A two-response paradigm in which people were required to give an initial response under time pressure and cognitive load allowed us to identify the presumed intuitive response that preceded the final response given after deliberation. Across our studies, we observe that correct final responses are often non-corrective in nature. Many reasoners who manage to answer the bat-and-ball problem correctly after deliberation already solved it correctly when they reasoned under conditions that minimised deliberation in the initial response phase. This suggests that sound bat-and-ball reasoners do not necessarily need to deliberate to correct their intuitions; their intuitions are often already correct. Pace the corrective view, findings suggest that in these cases, they deliberate to verify correct intuitive insights.

Question 5

Aven (2018)

Answer 5

In the field of risk perception and behavioural decision-making, a dichotomy is commonly made by two modes of thought: System 1, which operates automatically and quickly, instinctively and emotionally, and System 2, which is slower, more logical, and deliberative. A considerable body of literature exists linking this dichotomy to risk analysis. It is argued that, to properly respond to and handle risk, both types of thinking are needed; they are complementary. However, current risk assessment practice is to a large extent founded on System 2 thinking. System 1 thinking is associated with affects and risk perception, separated from the professional/scientific risk assessments. The present paper argues that this practice is rooted in a traditional risk assessment perspective, highlighting probabilistic and statistical modelling and analysis. Using broader and recent perspectives on risk, highlighting uncertainties instead of probabilities, there is a potential to improve this practice and to also obtain a stronger use of System 1 thinking in risk assessments. The aim of the paper is to provide substance to these theses, by formalising the issues raised and outlining suitable approaches and methods for how to obtain the desired integration of both System 1 and System 2 thinking in professional risk assessment and management.

Question 6

Khatri et al. (2018)

Answer 6

Most models of technology adoption and use assume a rational decision maker engaged in thoughtful deliberate consideration of the new technology. However, recent research in psychology concludes that such deliberate, rational, conscious decision-making (termed System 2 cognition) has less influence on behavior than originally thought; nonconscious automatic cognition (termed System 1 cognition), which is often influenced by personality characteristics and pattern matching based on past experience, also plays a key role in most decisions. As users adopt and use new technologies time and time again, a set of general expectations about new technology adoption begins to emerge. A user’s personality combined with this pattern of positive and negative experiences creates System 1 heuristics that are triggered when a user faces a similar decision in the future. The focus of this paper is to examine the extent to which the predispositions produced by System 1 automatic cognition – both enabling and inhibiting – versus the deliberate technology assessment produced by System 2 cognition influence technology adoption and use. We found that enabling predispositions influences the formation of intentions to use a new technology, and both enabling and inhibiting predispositions influence an individual’s ultimate follow through in acting on his or her intentions and actually using new technologies. Our research suggests that concepts previously seen as “determinants” of technology adoption and use (e.g., performance expectancy, effort expectancy, social influence, and facilitating conditions) are not really determinants but rather are important partial mediators in a larger nomological network that includes both automatic System 1 cognition and deliberate System 2 cognition.

Question 7

Johnson et al. (2016)

Answer 7

A long prevailing view of human reasoning suggests severe limits on our ability to adhere to simple logical or mathematical prescriptions. A key position assumes these failures arise from insufficient monitoring of rapidly produced intuitions. These faulty intuitions are thought to arise from a proposed substitution process, by which reasoners unknowingly interpret more difficult questions as easier ones. Recent work, however, suggests that reasoners are not blind to this substitution process, but in fact detect that their erroneous responses are not warranted. Using the popular bat-and-ball problem, we investigated whether this substitution sensitivity arises out of an automatic System 1 process or whether it depends on the operation of an executive resource demanding System 2 process. Results showed that accuracy on the bat-and-ball problem clearly declined under cognitive load. However, both reduced response confidence and increased response latencies indicated that biased reasoners remained sensitive to their faulty responses under load. Results suggest that a crucial substitution monitoring process is not only successfully engaged, but that it automatically operates as an autonomous System 1 process. By signaling its doubt along with a biased intuition, it appears System 1 is “smarter” than traditionally assumed.

Question 8

Lau and Redlawsk (2001)

Answer 8

This article challenges the often un- tested assumption that cognitive “heuristics” improve the decision-making abilities of everyday voters. The potential benefits and costs of five common political heuristics are discussed. A new dynamic process-tracing methodology is employed to
directly observe the use of these five heuristics by voters in a mock presidential election campaign. We find that cognitive heuristics are at times employed by almost all voters and that they are particularly likely to be used when the choice situation facing voters is complex. A hypothesized interaction between political sophistication and heuristic use on the quality of decision making is obtained across several different experiments, however. As predicted, heuristic use generally increases the probability of a correct vote by political experts but decreases the probability of a correct vote by novices. A situation in which experts can be led astray by heuristic use is also illustrated. Discussion focuses on the implications of these findings for strategies to increase input from under-represented groups into the political process

https://www.jstor.org/stable/pdf/2669334.pdf?refreqid=excelsior%3A94129ad2cf560a2cc3efce8494d5d186

Question 9

Fiedler (2000)

Answer 9

A cognitive-ecological approach to judgment biases is presented and substantiated by recent empirical evidence. Latent properties of the environment are not amenable to direct assessment but have to be inferred from empirical samples that provide the interface between cognition and the environment. The sampling process may draw on the external world or on internal memories. For systematic reasons (proximity, salience, and focus of attention), the resulting samples tend to be biased (selective, skewed, or conditional on information search strategies). Because people lack the metacognitive ability to understand and control for sampling constraints (predictor sampling, criterion sampling, selective-outcome sampling, etc.), the sampling biases carry over to subsequent judgments. Within this framework, alternative accounts are offered for a number of judgment biases, such as base-rate neglect, confirmation bias, illusory correlation, pseudocontingency, Simpson’s paradox, outgroup devaluation, and pragmatic-confusion effects.

Question 10

Gilovich et al. (1985)

Answer 10

We investigate the origin and the validity of common beliefs regarding “the hot hand” and “streak shooting” in the game of basketball. Basketball players and fans alike tend to believe that a player’s chance of hitting a shot are greater following a hit than following a miss on the previous shot. However, detailed analyses of the shooting records of the Philadelphia 76ers provided no evidence for a positive correlation between the outcomes of successive shots. The same conclusions emerged from free-throw records of the Boston Celtics, and from a controlled shooting experiment with the men and women of Cornell’s varsity teams. The outcomes of previous shots influenced Cornell players’ predictions but not their performance. The belief in the hot hand and the “detection” of streaks in random sequences is attributed to a general misconception of chance according to which even short random sequences are thought to be highly representative of their generating process.

Question 11

Ehrig and Schmidt (2019)

Answer 11

The heuristics strategists use to make predictions about key decision variables are often learned from only a small sample of observations, which leads to a risk of inappropriate generalization when strategists misjudge regularities. Building on the statistical learning literature, we show how strategists can mitigate this risk. Strategies to learn heuristics that accept a bias, that is, a systematic deviation of predictions from actual outcomes, can outperform unbiased strategies because they can reduce the variance component of prediction error: the degree to which random fluctuations in observational data are inappropriately generalized. We demonstrate how strategists who are aware of the trade-off between bias and variance can learn heuristics more effectively if they are also aware of the relevant characteristics of their learning environment. We discuss the implications of our results for our understanding of heuristics, (dynamic) capabilities, and managerial cognitive capabilities, and we outline opportunities for empirical work.

Question 12

Miller and Sanjurjo (2018)

Answer 12

We prove that a subtle but substantial bias exists in a common measure of the conditional dependence of present outcomes on streaks of past outcomes in sequential data. The magnitude of this streak selection bias generally decreases as the sequence gets longer, but increases in streak length, and remains substantial for a range of sequence lengths often used in empirical work. We observe that the canonical study in the influential hot hand fallacy literature, along with replications, are vulnerable to the bias. Upon correcting for the bias, we find that the longstanding conclusions of the canonical study are reversed.

Question 13

Rothlind et al. (2019)

Answer 13

Method: The present study investigated these hypotheses using a common-metric approach (Rothlind, Dukarm, and Kraybill, 2016). Participants included 199 adults, recruited from community sources, including healthy adult volunteers and individuals at-risk for neuropsychological impairment secondary to human immunodeficiency virus (HIV) positive status or active heavy alcohol consumption or both. Immediately following completion of standardized neuropsychological tests, participants estimated their own performance percentile ranking.

Results: Both high and low-scoring examinees displayed a conservative bias in ranking their own neuropsychological performance. However, lower scores were associated with least accurate self-appraisals overall.

Conclusion: Findings suggest that cognitive impairments are associated with lower accuracy in self-rating of cognitive ability, but also that normal biases complicate interpretation of self-appraisal ratings across the spectrum of neuropsychological functioning. The importance of recognizing these biases in clinical research and practice is emphasized, and directions for future research are discussed.

Question 14

Nilsson et al. (2008)

Answer 14

The idea that people often make probability judgments by a heuristic short-cut, the representativeness heuristic, has been widely influential, but also criticized for being vague. The empirical trademark of the heuristic is characteristic deviations between normative probabilities and judgments (e.g., the conjunction fallacy, base-rate neglect). In this article the authors contrast two hypotheses concerning the cognitive substrate of the representativeness heuristic, the prototype hypothesis (Kahneman & Frederick, 2002) and the exemplar hypothesis (Juslin & Persson, 2002), in a task especially designed to elicit representativeness effects. Computational modelling and an experiment reveal that representativeness effects are evident early in training and persist longer in a more complex task environment and that the data are best accounted for by a model implementing the exemplar hypothesis.

Question 15

AlKhars et al. (2019)

Answer 15

Purpose: Operations managers are subjected to various cognitive biases, which may lead them to make less optimal decisions as suggested by the normative models. In their seminal work, Tversky and Kahneman introduced three heuristics based on which people make decisions: representativeness, availability, and anchoring. This paper aims to investigate the six cognitive biases resulting from the use of the representativeness heuristic, namely, insensitivity to prior probability of outcomes, insensitivity to sample size, misconception of chance, insensitivity to predictability, the illusion of validity, and misconception of regression. Specifically, the paper examines how cognitive reflection and training affect these six cognitive biases in the operations management context.

Methods: For each cognitive bias, a scenario related to operations management was developed. The participants of the experimental study are asked to select among three responses, where one response is correct and the other two are biased. A total of 315 students from the University of North Texas participated in this study and 302 valid responses were used in the analysis.

Results: The results show that in all six scenarios, >50% of the respondents make biased decisions. However, using simple training, the bias is significantly reduced. Regarding the relationship between cognitive biases and cognitive reflection, the results partially support the hypothesis that people with high cognitive reflection ability tend to make less biased decisions. Regarding the effect of training on making biased decisions, the results show that making people aware of the existence of cognitive biases helps them partially to avoid making biased decisions.

Conclusion: Overall, our study demonstrates the value of training in helping operations managers make less biased decisions. Our discussion section offers some related guidelines for creating a professional environment where the effect of the representativeness heuristic is minimized.

Question 16

Kulkami et al. (2019)

Answer 16

Background

Under-triage of severely injured patients presenting to non-trauma centers (failure to transfer to a trauma center) remains problematic despite quality improvement efforts. Insights from the behavioral science literature suggest that physician heuristics (intuitive judgments), and in particular the representativeness heuristic (pattern recognition), may contribute to under-triage. However, little is known about how the representativeness heuristic is instantiated in practice.

Methods

A multi-disciplinary group of experts identified candidate characteristics of “representative” severe trauma cases (e.g., hypotension). We then reviewed the charts of patients with moderate-to-severe injuries who presented to nine non-trauma centers in western Pennsylvania from 2010-2014 to assess the association between the presence of those characteristics and triage decisions. We tested bivariate associations using chi(2) and Fisher’s Exact method and multivariate associations using random effects logistic regression.

Results

We identified 235,605 injured patients with 3,199 patients (1%) having moderate-to-severe injuries. Patients had a median age of 78 years (SD 20.1) and mean Injury Severity Score of 10.9 (SD 3.3). Only 759 of these patients (24%) were transferred to a trauma center as recommended by the American College of Surgeons clinical practice guidelines. Representative characteristics occurred in 704 patients (22%). The adjusted odds of transfer were higher in the presence of representative characteristics compared to when they were absent (aOR 1.7, 95% CI: 1.4-2.0, p < 0.001).

Conclusions

Most moderate-to-severely injured patients present without the characteristics representative of severe trauma. Presence of these characteristics is associated with appropriate transfer, suggesting that modifying physicians’ heuristics in trauma may improve triage patterns.

Question 17

Schwartz et al. (1991)

Answer 17

According to the cooperative principle of conversation that governs social discourse in everyday life, listeners expect speakers to be relevant, truthful, and informative. In studies on judgmental biases, researchers frequently violate this principle by presenting information that is neither informative nor relevant in a communicative context that suggests otherwise. However, subjects have no reason to doubt the relevance of the presented information and try to make sense of it, as they would be expected to do in everyday life. In Experiment 1, the applicability of the cooperative principle was varied to explore the impact of conversational principles on the apparent overreliance of individuals on nondiagnostic person information at the expense of base-rate information. Nondiagnostic person information was presented either as a statement written by a psychologist or as a random sample of information drawn by a computer. As predicted, subjects relied on the personality information rather than on base-rate information to a greater extent in the former than in the latter case, presumably because a human communicator (but not a computer) is supposed to conform to conversational norms and to provide in formation that is informative, truthful, and relevant. In addition, subjects relied more on individuating information when the framing of the task implied that psychologists provided correct estimates than when it implied that statisticians provided correct estimates and when the individuating rather than the base-rate information was varied as a within-subjects factor (Experiment 2).

Question 18

Gualtieri and Denison (2018)

Answer 18

In classic examinations of the representativeness heuristic, Kahneman and Tversky (1973) presented adult participants with a description of an individual who fit their stereotype of a typical engineer. Importantly, even when participants were told that the individual was drawn from a sample of 70 lawyers and 30 engineers, they estimated that the individual was an engineer at very high levels, showing that they relied almost exclusively on the personality description. Relying on the representativeness heuristic can lead to base-rate neglect and, thus, biased judgments. Two experiments provide insight into the development of the representativeness heuristic in young children using an adaptation of the classic lawyer–engineer problem. Experiment 1 (N = 96) established that 3- to 5-year-olds can use base-rate information on its own, and 4- and 5-year-olds can use individuating information on its own, to make inferences. Experiment 2 (N = 192) varied the relevance of the individuating information across conditions to assess the pervasiveness of this bias early in development. Here 5- and 6-year-olds, much like adults, continue to attempt to rely on individuating information when making classifications even if that information is irrelevant. Together, these experiments reveal how the representativeness heuristic develops across the preschool years and suggest that the bias may strengthen between 4 and 6 years of age.

Question 19

Raue and Scholl (2018)

Answer 19

When making decisions under risk and uncertainty, people often rely on heuristics. A heuristic is a simple decision rule that allows one to make judgments without integrating all the information available. Especially in complex situations and under time pressure, simplification supports humans in coping with their limited capacity to process information. In this chapter, we introduce two main approaches: the heuristics and biases program (including the availability, representativeness, affect, as well as anchoring and adjustment heuristics) and the fast and frugal heuristics. Sometimes, the use of heuristics can lead people astray and result in errors, which is the focus of the heuristics and biases program. But in many other instances, heuristics support effective decision making in complex situations and lead to sufficient outcomes, which is the focus of the fast and frugal heuristics approach. We discuss the underlying processes, criticisms, and limitations of both approaches. We also consider practical implications of heuristics using the perception of climate change as an example and introduce applications in the form of nudges and decision trees.

Question 20

Obrecht and Chesney (2016)

Answer 20

People often base judgments on stereotypes, even when contradictory base-rate information is provided. In a sample of 438 students from two state universities, we tested several hypotheses regarding why people would prefer stereotype information over base-rates when making judgments: A) People believe stereotype information is more diagnostic than base-rate information, B) people find stereotype information more salient than base-rate information, or C) even though people have
some intuitive access to base-rate information, they may need to engage in deliberation before they can make full use of it, and often fail to do so. In line with the deliberative failure account, and counter to the diagnosticity account, we found that inducing deliberation by having people evaluate statements supporting the use of base-rates increased the use of base-rate information. Moreover, counter to the salience and diagnosticity accounts, asking people to evaluate statements supporting the use of stereotypes decreased reliance on stereotype information. Additionally, more numerate subjects were more likely
to make use of base-rate information.

Question 21

Alter et al. (2007)

Answer 21

Humans appear to reason using two processing styles: System 1 processes that are quick, intuitive, and effortless and System 2 processes that are slow, analytical, and deliberate that occasionally correct the output of System 1. Four experiments suggest that System 2 processes are activated by metacognitive experiences of difficulty or disfluency during the process of reasoning. Incidental experiences of difficulty or disfluency–receiving information in a degraded font (Experiments 1 and 4), in difficult-to-read lettering (Experiment 2), or while furrowing one’s brow (Experiment 3)–reduced the impact of heuristics and defaults in judgment (Experiments 1 and 3), reduced reliance on peripheral cues in persuasion (Experiment 2), and improved syllogistic reasoning (Experiment 4). Metacognitive experiences of difficulty or disfluency appear to serve as an alarm that activates analytic forms of reasoning that assess and sometimes correct the output of more intuitive forms of reasoning.

Question 22

Krawczyk and Rachubik (2019)

Answer 22

The representativeness heuristic (RH) has been proposed to be at the root of several types of biases in judgment. In this project, we ask whether the RH is relevant in two kinds of choices in the context of gambling. Specifically, in a field experiment with naturalistic stimuli and a potentially extremely high monetary pay-out, we give each of our subjects a choice between a lottery ticket with a random-looking number sequence and a ticket with a patterned sequence; we subsequently offer them a small cash bonus if they switch to the other ticket. In the second task, we investigate the gambler’s fallacy, asking subjects what they believe the outcome of a fourth coin toss after a sequence of three identical outcomes will be. We find that most subjects prefer “random” sequences, and that approximately half believe in dependence between subsequent coin tosses. There is no correlation, though, between the initial choice of the lottery ticket and the prediction of the coin toss. Nonetheless, subjects who have a strong preference for certain number combinations (i.e., subjects who are willing to forgo the cash bonus and remain with their initial choice) also tend to predict a specific outcome (in particular a reversal, corresponding to the gambler’s fallacy) in the coin task.

Question 23

Nazlan et al. (2018)

Answer 23

This research investigates principles of judgmental heuristics and dual processing systems in the online purchasing environment. It examines the effects of availability cues in restaurant reviews on dining intentions and menu item choice. Two experiments are reported in which consumers make dining out and food choice decisions using simulated online review sites. The first experiment evaluates primacy-recency effects of positive and negative reviews along with different review types. The findings indicate that text plus ratings produce higher visit intentions and expectations compared with either cue by itself. The second experiment examines the effects of rating format, visual cues, and review valence on menu item choice. Pictures increase likelihood to choose a positively reviewed menu item but do not influence likelihood to choose a negatively reviewed item. This finding supports the negativity bias, whereby consumers place more weight on negative versus positive information. Consumers are more likely to choose a menu item with pictures when ratings are in numerical versus star rating format. The findings can be interpreted in terms of System 1 (heuristic) and System 2 (systematic) processing.

Question 24

Kudryavstev (2018)

Answer 24

The author explores the effect of the availability heuristic on large daily stock price changes and on subsequent stock returns. He hypothesizes that if a major positive (negative) stock price move takes place on a day when the stock market index rises (falls), then its magnitude may be amplified by the availability of positive (negative) investment outcomes. In both cases, the availability heuristic may cause price overreaction to the initial company-specific shock, resulting in subsequent price reversal. In line with the hypothesis, the author documents that both positive and negative large price moves accompanied by the same-sign contemporaneous daily market returns are followed by significant reversals on the next 2 trading days and over 5- and 20-day intervals following the event, the magnitude of the reversals increasing over longer postevent windows, while large stock price changes taking place on the days when the market index moves in the opposite direction are followed by nonsignificant price drifts. The results remain robust after accounting for additional company (size, beta, historical volatility) and event-specific (stock’s return and trading volume on the event day) factors, and are stronger for small and volatile stocks.

Question 25

Richie and Josephson (2018)

Answer 25

Construct: Authors examined whether a new vignette-based instrument could isolate and quantify heuristic bias. Background: Heuristics are cognitive shortcuts that may introduce bias and contribute to error. There is no standardized instrument available to quantify heuristic bias in clinical decision making, limiting future study of educational interventions designed to improve calibration of medical decisions. This study presents validity data to support a vignette-based instrument quantifying bias due to the anchoring, availability, and representativeness heuristics. Approach: Participants completed questionnaires requiring assignment of probabilities to potential outcomes of medical and nonmedical scenarios. The instrument randomly presented scenarios in one of two versions: Version A, encouraging heuristic bias, and Version B, worded neutrally. The primary outcome was the difference in probability judgments for Version A versus Version B scenario options. Results: Of 167 participants recruited, 139 enrolled. Participants assigned significantly higher mean probability values to Version A scenario options (M = 9.56, SD = 3.75) than Version B (M = 8.98, SD = 3.76), t(1801) = 3.27, p = .001. This result remained significant analyzing medical scenarios alone (Version A, M = 9.41, SD = 3.92; Version B, M = 8.86, SD = 4.09), t(1204) = 2.36, p = .02. Analyzing medical scenarios by heuristic revealed a significant difference between Version A and B for availability (Version A, M = 6.52, SD = 3.32; Version B, M = 5.52, SD = 3.05), t(404) = 3.04, p = .003, and representativeness (Version A, M = 11.45, SD = 3.12; Version B, M = 10.67, SD = 3.71), t(396) = 2.28, p = .02, but not anchoring. Stratifying by training level, students maintained a significant difference between Version A and B medical scenarios (Version A, M = 9.83, SD = 3.75; Version B, M = 9.00, SD = 3.98), t(465) = 2.29, p = .02, but not residents or attendings. Stratifying by heuristic and training level, availability maintained significance for students (Version A, M = 7.28, SD = 3.46; Version B, M = 5.82, SD = 3.22), t(153) = 2.67, p = .008, and residents (Version A, M = 7.19, SD = 3.24; Version B, M = 5.56, SD = 2.72), t(77) = 2.32, p = .02, but not attendings. Conclusions: Authors developed an instrument to isolate and quantify bias produced by the availability and representativeness heuristics, and illustrated the utility of their instrument by demonstrating decreased heuristic bias within medical contexts at higher training levels.

Question 26

Chen et al. (2017)

Answer 26

Design/methodology/approach - This study uses the conventional and standard dummy variable regression model, as employed in prior studies, and further includes some control variables for firm, industry and macro-economic level factors. Moreover, 19 industrial indices for Taiwanese stock market over the period January 1990 to December 2014 are included in this study to examine the hypotheses, except for the 1997 Asian financial crisis and the global financial crisis period of 2007-2009 to avoid the potential effect. On the other hand, the authors also use the entire sample period of 1990-2014 for understanding whether the magnitude of January effect is different.

Findings - The empirical results indicate that Chinese bonus payments in January induce a strong January effect in the Taiwanese stock market, especially when most listed firms have positive earnings growth in the preceding year, suggesting a house money effect. Moreover, this study further provides some preliminary evidence that the higher January returns due to bonus culture are apparent only in the electronics industry when both Chinese New Year and bonus payments are in January, implying the role of availability heuristic based on the electronics stocks in investor behavior before the impending stock exchange holidays. Some robust tests show qualitative support.

Question 27

Geurten et al. (2015)

Answer 27

children had to generate small/large number of names

those in the hard condition said they could remember fewer names

rely on ease (how quickly they can bring the information to mind) to regulate decision making processes

Question 28

Pachur et al. (2012)

Answer 28

How does the public reckon which risks to be concerned about? The availability heuristic and the affect heuristic are key accounts of how laypeople judge risks. Yet, these two accounts have never been systematically tested against each other, nor have their predictive powers been examined across different measures of the public’s risk perception. In two studies, we gauged risk perception in student samples by employing three measures (frequency, value of a statistical life, and perceived risk) and by using a homogeneous (cancer) and a classic set of heterogeneous causes of death. Based on these judgments of risk, we tested precise models of the availability heuristic and the affect heuristic and different definitions of availability and affect. Overall, availability-by-recall, a heuristic that exploits people’s direct experience of occurrences of risks in their social network, conformed to people’s responses best. We also found direct experience to carry a high degree of ecological validity (and one that clearly surpasses that of affective information). However, the relative impact of affective information (as compared to availability) proved more pronounced in value-of-a-statistical-life and perceived-risk judgments than in risk-frequency judgments. Encounters with risks in the media, in contrast, played a negligible role in people’s judgments. Going beyond the assumption of exclusive reliance on either availability or affect, we also found evidence for mechanisms that combine both, either sequentially or in a composite fashion. We conclude with a discussion of policy implications of our results, including how to foster people’s risk calibration and the success of education campaigns.

Question 29

Englich et al. (2006)

Answer 29

Judicial sentencing decisions should be guided by facts, not by chance. The present research however demonstrates that the sentencing decisions of experienced legal professionals are influenced by irrelevant sentencing demands even if they are blatantly determined at random. Participating legal experts
anchored their sentencing decisions on a given sentencing
demand and assimilated toward it even if this demand came from an irrelevant source (Study 1), they were informed that this demand was randomly determined (Study 2), or they randomly determined this demand themselves by throwing dice (Study 3). Expertise and experience did not reduce this effect. This sentencing bias appears to be produced by a selective increase in the
accessibility of arguments that are consistent with the random sentencing demand: The accessibility of incriminating arguments was higher if participants were confronted with a high rather than a low anchor (Study 4). Practical and theoretical implications of this research are discussed.

Question 30

Majer et al. (2019)

Answer 30

anchoring effects in negotiation processes

demonstrated how motivational forces (avoiding an offer) produce anchoring effects

Abundant research has established that first proposals can anchor negotiations and lead to a first-mover advantage. The current research developed and tested a motivated anchor adjustment hypothesis that integrates the literatures on framing and anchoring and highlights how anchoring in negotiations differs in significant ways from standard decision-making contexts. Our research begins with the premise that first proposals can be framed as either an offer of resources (e.g., I am offering my A for your B) that highlights gains versus a request for resources (e.g., I am requesting your B for my A) that highlights losses to a responder. We propose that this framing would affect the concession aversion of responders and ultimately the negotiated outcomes. We predicted that when a first proposal is framed as an offer, the well-documented anchoring and first-mover advantage effect would emerge because offers do not create high levels of concession aversion. In contrast, because requests highlight what the responder has to give up, we predicted that opening requests would produce concession aversion and eliminate and even reverse the first-mover advantage. Across 5 experiments, the classic first-mover advantage in negotiations was moderated by the framing of proposals because anchor framing affected concession aversion. The studies highlight how motivational forces (i.e., concession aversion) play an important role in producing anchoring effects, which has been predominantly viewed through a purely cognitive lens. Overall, the findings highlight when and how motivational processes play a key role in both judgmental heuristics and mixed-motive decision-making.

Question 31

Goldberg et al. (2019)

Answer 31

Recent scholarship finds that communicating descriptive norms, such as the fact that 97% of climate scientists have concluded that human‐caused climate change is happening, is an effective gateway to changing individuals’ beliefs and attitudes about climate change and support for climate policies. Other scholars, however, have offered an alternative explanation: priming people with any “97%” figure serves as an anchoring heuristic that leads people to adjust their estimates of the scientific consensus. This study investigates this proposed anchoring effect. Results from three parallel experiments indicate that participants consistently update their perceptions of the scientific consensus when they receive a relevant statement about the scientific consensus on climate change, but not when receiving a semantically equivalent but otherwise irrelevant consensus cue that might be used as an anchor. Further, we find that perceived consensus mediates the effect of the consensus treatment on individuals’ attitudes. We also find that conservatives updated their consensus estimates significantly more than liberals. We replicate these results across three large samples from different sources (Total N = 3,132). These findings indicate that when people update their estimates of the scientific consensus, it reflects a genuine update in their beliefs and is unlikely to be a result of the anchoring and adjustment heuristic. This work contributes to a growing literature on the value of communicating expert consensus about contested scientific issues.

Question 32

Epley and Gilovich (2006)

Answer 32

One way to make judgments under uncertainty is to anchor on information that comes to mind and adjust until a plausible estimate is reached. This anchoring-and-adjustment heuristic is assumed to underlie many intuitive judgments, and insufficient adjustment is commonly invoked to explain judgmental biases. However, despite extensive research on anchoring effects, evidence for adjustment-based anchoring biases has only recently been provided, and the causes of insufficient adjustment remain unclear. This research was designed to identify the origins of insufficient adjustment. The results of two sets of experiments indicate that adjustments from self-generated anchor values tend to be insufficient because they terminate once a plausible value is reached (Studies 1a and 1b) unless one is able and willing to search for a more accurate estimate (Studies 2a-2c).

Question 33

Barbosa et al. (2019)

Answer 33

Cognitive heuristics, biases, and overconfidence have been suggested as an explanation for entrepreneurial entry. Nevertheless, empirical research on the subject has produced mixed findings and has under-explored the cognitive mechanisms leading to overconfidence in entrepreneurial settings. In two within-subject experiments, we focus on three cognitive heuristics—reference point framing, outcome salience framing, and anchoring in conjunctive events—and examine their effects on perceived risk, confidence, required and estimated probabilities of success, and the decision to start a new venture. Our findings show that reference point framing and outcome salience framing affect the decision to enter directly and indirectly via risk perception, but do not affect confidence. In addition, the effect of anchoring is contingent on the congruence between its semantic and its numeric influences. Overconfidence only obtains when the numeric and semantic influences of anchoring are aligned and aimed at enhancing the salience of potential positive outcomes, i.e., through high probabilities of success.

Question 34

Lieder et al. (2017)

Answer 34

created the rational process model

explanation for anchoring phenomena - looked at effect of accuracy motivation and limited cognitive resources

Cognitive biases, such as the anchoring bias, pose a serious challenge to rational accounts of human cognition. We investigate whether rational theories can meet this challenge by taking into account the mind’s bounded cognitive resources. We asked what reasoning under uncertainty would look like if people made rational use of their finite time and limited cognitive resources. To answer this question, we applied a mathematical theory of bounded rationality to the problem of numerical estimation. Our analysis led to a rational process model that can be interpreted in terms of anchoring-and-adjustment. This model provided a unifying explanation for ten anchoring phenomena including the differential effect of accuracy motivation on the bias towards provided versus self-generated anchors. Our results illustrate the potential of resource-rational analysis to provide formal theories that can unify a wide range of empirical results and reconcile the impressive capacities of the human mind with its apparently irrational cognitive biases.

Question 35

Mussweiler and Strack (2000)

Answer 35

Five studies examine the role that category and exemplar knowledge play in the mediation of anchoring effects—the assimilation of an absolute estimate to a previously considered standard. Studies 1 through 3 demonstrate that comparing the target object with a plausible anchor (i.e., a standard that constitutes a possible value for the target) leads to a selective increase in the accessibility of anchor-consistent exemplar knowledge about the target. This easily accessible knowledge is then used to generate the absolute estimate, which leads to its assimilation to the standard. Studies 4 and 5 demonstrate that comparing the target with an implausible anchor, however, involves the activation of knowledge about the general category of the target, rather than exemplar knowledge about the target itself.

Question 36

Harris et al. (2019)

Answer 36

Numerical anchoring effects describe the assimilative effect of a previously presented number on subsequent numerical estimates. Such effects are robust and consequential. A number of different accounts have been proposed to explain these effects. What is currently unclear is under which situations different mechanisms play more or less critical roles. An extant test from the literature is proposed as a ‘signature test’ for the operation of selective accessibility mechanisms. Four experiments were conducted to ascertain the evidence for selective
accessibility with this test, tests that subsequently failed. A fifth experiment employed a different methodology, and again failed to show evidence for selective accessibility.
Subsequent discussion suggests that the robustness of anchoring effects is remarkable, but the theoretical basis for some previous tests of the selective accessibility account of anchoring is shaky, and we advise against its use in this capacity.

Question 37

Yoon et al. (2019)

Answer 37

Anchoring has been shown to influence numeric judgments in various domains, including preferential judgment tasks. Whereas many studies and a recent Many Labs project have shown robust effects in classic anchoring tasks, studies of anchoring effects on preferential judgments have had inconsistent results. In this paper, we investigate the replicability and robustness of anchoring on willingness-to-pay, which is a widely used measure for consumer preference. We employ a
combination of approaches, aggregating data from previous studies and also contributing additional replication studies designed to reconcile inconsistent previous results. We examine the effect of differing experimental procedures used in prior studies, and test whether publication bias could contribute to the inconsistent findings. We find that different experimental procedures used in previous studies do not explain the divergent results, and that anchoring effects are generally robust to differences in procedures, participant populations, and experimental settings.

Question 38

Dowd and Artistico (2016)

Answer 38

The thrust of this study was to evaluate the effect of self-construal type and strength on self-efficacy when an anchoring heuristic is provided. Participants were randomly assigned to one of four conditions: high anchor, low anchor, medium anchor, or no anchor. We first measured self-construal type (independent versus interdependent, or “I” versus “We”) and also computed participants’ strength of self-construal type. Finally, we measured participants’ perceived self-efficacy to complete a puzzle task. Our findings indicated a three-way interaction among “anchors,” self-construal type and self-construal strength regarding self-efficacy. A main effect for self-construal type was also found. Specifically, independent self-construal participants had significantly higher levels of self-efficacy. The theoretical basis as well as the implications of this finding are discussed.

Question 39

Bokulic and Polsek (2010)

Answer 39

The article is a summary of recent experimental data on anchoring heuristic and models that seek to explain it. Anchoring heuristic represents one of the mechanisms of decision making in situations of limited information or time, by using a comparison standard called an anchor Given the supposed wide usage of this heuristic, authors explore the unconscious character of the heuristic and ways of making its biasing effects less prominent. Apart from the standard experimental design in which anchor is directly connected to the judgment in question, evidence shows that people can be anchored indirectly, even when the anchor is perceived unconsciously. Newest data show that anchoring effect should be explained by two distinct processes In the concluding remarks, authors consider broader implications of anchoring for the field of social cognition

Question 40

Morrow (2002)

Answer 40

This article presents a technique used to elucidate the anchoring-adjustment heuristic and to integrate the concept with social psychological principles, After drawing a high or low number out of a hat, students estimated the number of yearly stroke-related deaths that occur in the United States, The interaction between type of anchor and familiarity with the heuristic predicted stroke estimates. Class discussion highlighted the power of situational forces, implications of cognitive biases, and methodological issues. Students’ pre- and postdemonstration definitions of the anchoring,adjustment heuristic indicated that the demonstration helped them to understand the concept. Students described the demonstration and discussion as informative and enjoyable.