Individual differences in causal learning and decision making

This is an accepted author manuscript of an article subsequently published by Elsevier. The final published version can be found here: http://dx.doi.org/10.1016/j.actpsy.2005.04.003In judgment and decision making tasks, people tend to neglect the overall frequency of base-rates when they estimate the probability of an event; this is known as the base-rate fallacy. In causal learning, despite people s accuracy at judging causal strength according to one or other normative model (i.e., Power PC, DP), they tend to misperceive base-rate information (e.g., the cause density effect). The present study investigates the relationship between causal learning and decision making by asking whether people weight base-rate information in the same way when estimating causal strength and when making judgments or inferences about the likelihood of an event. The results suggest that people differ according to the weight they place on base-rate information, but the way individuals do this is consistent across causal and decision making tasks. We interpret the results as reflecting a tendency to differentially weight base-rate information which generalizes to a variety of tasks. Additionally, this study provides evidence that causal learning and decision making share some component processes

Dr. Ephraim Hareubeni

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Ownership Status and the Representation of Assets of Uncertain Value: The Balloon Endowment Risk Task (BERT)

Owners tend to overvalue possessions relative to non-owners: a phenomenon known as the endowment effect. In three experiments, using markets for goods of uncertain value, we investigated whether this can be partly attributed to misperceiving an asset's profitability or to uncertainty about a good's utility. To test our hypotheses, we devised the Balloon Endowment Risk Task, in which participants can sell or buy their right to participate in the Balloon Analogue Risk Task. Once purchased/retained, a virtual balloon is pumped to accrue money, which is lost if the balloon bursts. Participants first learn about the risky asset (balloon) by observing others playing the Balloon Analogue Risk Task before they enter the market. In Experiment 1, we replicated the endowment effect; yet, owners and non-owners predicted pumping the same number of times and subsequently did so when given that opportunity. In Experiments 2 and 3, the level of uncertainty about the balloon's profitability was manipulated by modifying the number of bursts that participants viewed in the initial learning stage. When more diagnostic information was provided, making the average burst point easier to estimate and reducing value uncertainty and increasing confidence in valuation, the endowment effect diminished although mean estimates of the average burst point did not differ between owners and non-owners. Thus, endowment effects were partly attributable to value uncertainty but could not be explained by owners and non-owners having divergent perceptions of the asset's payoff distributio