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Recent papers have demonstrated that the way people acquire information about a decision problem, by experience or by abstract description, can affect their behavior. We examined the role of experience over time in the emergence of the Gambler's Fallacy in binary prediction tasks. Theories of the Gambler's Fallacy and models of binary prediction suggest that recency bias, elicited by experience over time, may play a significant role. An experiment compared a condition where participants sequentially predicted the colored outcomes of a virtual roulette wheel spin with a condition where the wheel's past outcomes were presented all at once. In a third condition outcomes were presented sequentially in an automatic fashion without intervening predictions. Subjects were yoked so that the same history of outcomes was observed in all conditions. The results revealed the Gambler's Fallacy when outcomes were experienced (with or without predictions). However, the Gambler's Fallacy was attenuated when the same outcomes were presented all at once. Observing the Gambler's Fallacy in the third condition suggests that the presentation of information over time is a significant antecedent of the bias. A second experiment demonstrated that, while the bias can emerge with an all-at-once presentation that makes recent outcomes salient (Burns & Corpus, 2004), the bias did not emerge when the presentation did not draw attention to recent outcomes. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Desirability bias is the tendency to overpredict desirable outcomes and under-predict unwanted outcomes. Previous research suggests that this bias is quite pervasive among non-experts but there is very scant evidence of its intensity among experts. For at least twenty years, financial academics and, to a lesser extent, practicing investment managers have claimed that the financial markets are among the most efficient and bias free in existence. Therefore, this paper examines the degree of desirability bias among expert and practicing US and Taiwanese investment managers. The empirical results suggest that desirability bias does appear to be a characteristic of these experts. [ABSTRACT FROM AUTHOR]

We show that preferences depend on the attributes that can be directly manipulated when people need to integrate multiple sources of information because direct manipulation causes focusing bias. This effect appears even when all relevant information is simultaneously and explicitly presented at the time the decisions are made. Participants decided how much to save, what investment risk to take and observed the future financial consequences in terms of the mean and variability of the expected retirement income. Participants who manipulated only the future income distribution saved more and took less risk. This effect disappears when the risk-related variables are removed, which indicates that task complexity is a mediator of such focusing effects. A more balanced trade-off between the choice attributes was selected when all attributes were manipulated. However, when there is a dichotomy between manipulating versus observing choice attributes, then decisions were based mostly on the manipulated attributes. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

How do people utilize information from outside sources in their decisions? Participants observed a signal-plus-noise or noise-alone event and then made a yes–no decision about whether a signal had occurred. Participants were provided with two information sources to aid decision making. Each source consisted of four components that provided estimates of signal likelihood. In Experiment 1, the two sources had equal overall accuracy but differed in the expertise and internal correlation of their components. A regression analysis indicated that participants overweighed the high-expertise-high-correlation source. This bias occurred on trials when the aggregate opinions of the sources disagreed. In Experiment 2, both the overall accuracy of the source and its components were manipulated. Participants overweighed information from the higher accuracy source. These biases reflect people's sensitivity to across-trial and within-trial differences in the accuracy and internal consistency of information sources. Experiment 3 provided additional evidence supporting these conclusions. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Two studies examined the effect of an individual difference variable, need for cognition (NC), and processing of the options on the occurrence of risky choice framing effects. In Study 1 (N=206), frame interacted with NC and math skill such that no framing effect was observed among those high in both NC and math skill. No effect was found for the processing manipulation of requesting a reason for one's choices. Study 2 (N=257) enhanced the processing of the problems by asking participants to write out the options as they would describe them to a friend. Results showed that frame interacted with NC and depth of processing such that no framing effect was observed among those high in NC who were in the deep processing condition. These findings suggest that NC and depth of processing need to be considered in concert in order to understand their moderating effects on framing. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Examination of search strategies has tended to focus on choices determined by decision makers' personal preferences among relevant cues, and not on learning cue-criterion relationships. We present an empirical and rational analysis of cue search for environments with objective criteria. In such environments, cues can be evaluated on the basis of three properties: validity (the probability that a cue identifies the correct choice if cue values differ between alternatives); discrimination rate (the proportion of occasions on which a cue has differing values); and success (the expected proportion of correct choices when only that cue can be used). Our experiments show that though there is a high degree of individual variability, success is a key determinant of search. Furthermore, a rational analysis demonstrates why success-directed search is the most adaptive strategy in many circumstances. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This article presents findings on the restructuring component of the decision process. Two experiments are described employing hypothetical vacation choice dilemmas. The aim was to explore the conditions under which outcomes common to two risky prospects with the same probabilities of occurrence are or are not cancelled and how consequent decisions are influenced. The design of the options presented to participants was based on pilot work to establish appropriate contexts. The key independent variable was the semantic relatedness between outcomes of the same risky prospect. The main finding was that the participants did not cancel the outcome shared by two prospects when it was semantically related to another outcome within the same prospect. In this case, the prospect with greater risk was chosen significantly more frequently in comparison to when the common outcome was unrelated to other outcomes. An interpretation of the findings is presented in terms of contingent editing processes. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]