Precision of probability information and prominence of outcomes: A description and evaluation of decisions under uncertainty.

Honekopp, Johannes (2003) Precision of probability information and prominence of outcomes: A description and evaluation of decisions under uncertainty. Organizational Behavior and Human Decision Processes, 90 (1). pp. 124-138. ISSN 0749-5978

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Official URL: http://dx.doi.org/10.1016/S0749-5978(02)00514-9

Abstract

Information about event probability upon which decisions depend may be more or less precise. The first section of this paper reports three experiments that investigated the relationship between this type of imprecision and the prominence that outcomes obtain in decisions. Participants had to rank order sets of six lotteries according to attractiveness. While the lotteries’ values were always precisely known precision of information about lottery chances varied. These experiments showed that increasing ambiguity tied decisions closer to lottery values. The second section shows that modeling participants’ decisions with the contingent weighting model suggests that this outcome prominence effect was not necessarily caused by any change in the respective weighting of probability and outcome information, but that it had probably occurred for purely mathematical reasons. The third part of this paper explores, by means of a computer simulation, (i) which weighting strategy is optimal when probabilities are imprecise and (ii) how participants’ decision behavior compared to a simple, but better adapted strategy. It shows that the weighting of probability information should not change with decreasing precision and it implies that participants’ performance suffered most from a lack of strategic consequence. Implications for decision making policy in general are discussed.

Item Type: Article
Subjects: C800 Psychology
Department: Faculties > Health and Life Sciences > Psychology
Depositing User: EPrint Services
Date Deposited: 07 May 2010 12:15
Last Modified: 24 Oct 2017 11:36
URI: http://nrl.northumbria.ac.uk/id/eprint/2538

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