A possible basis for conservatism in signal detection and probabilistic categorization tasks

It is commonly claimed that conservative placement of the criterion in signal detection is due to the form of the utility function of money, to conservatism in the estimation of prior probabilities, or to probability matching tendencies. This article shows how conservatism could be caused by a systematic misconception of the shape of the underlying distributions. An experiment is described in which subjects were asked to make posterior probability judgments after performing numerical analogues of signal detection. The posterior probability judgments were radical, i.e., high posterior probabilities were overestimated and low posterior probabilities were underestimated; if this pattern of radical probability estimation reflects the subjects’ understanding of the underlying distributions, it would account for conservative criterion placement.