The affective costs of overconfidence

Positive illusions, though often beneficial (Taylor & Brown, 1988 ), can diminish the pleasure of outcomes. This prediction follows from decision affect theory. We investigated this prediction by measuring the confidence that recreational basketball players felt while making shots and the pleasure they felt with subsequent outcomes. Results showed that most players were overconfident. Those who were more overconfident tended to experience less enjoyment with their outcomes. Using individual parameter estimates from decision affect theory, we estimated how each player would have felt if their self assessments had been accurate. For the vast majority, better calibration would have led to greater pleasure. In a second study, we randomly assigned players to a debiasing treatment condition or a control condition. Relative to the control players, debiased players were better calibrated and derived greater average pleasure from the task. Copyright © 2004 John Wiley & Sons, Ltd.     

The decision tree polytope and its application to sequential decision problems

This paper describes a new mathematical programming approach to sequential decision problems that have an underlying decision tree structure. The approach, based upon a characterization of strategies as extreme points of a 0–1 polytope called the ‘decision tree polytope’, is particularly suited to the direct examination of risk-return and other tradeoffs amongst strategies. However, it can also be used for conventional utility maximization if a utility function is available. Further, the approach requires no algorithmic development—it can be implemented using commercially available algebraic modeling software and can solve large problems. A related, and already known, approach can be used for some more general Markov decision problems. © 1998 John Wiley & Sons, Ltd.     

The pros and cons of funnel plots as an aid to risk communication and patient decision making

Funnel plots, which simultaneously display a sample statistic and the corresponding sample size for multiple cases, have a range of applications. In medicine, they are used to display treatment outcome rates and caseload volume by institution, which can inform strategic decisions about health care delivery. We investigated lay people's understanding of such plots and explored their suitability as an aid to individual treatment decisions. In two studies, 172 participants answered objective questions about funnel plots representing the surgical outcomes (survival or mortality rates) of institutions varying in caseload, and indicated their preferred institutions. Accuracy for extracting objective information was high, unless question phrasing was inconsistent with the plot's survival/mortality framing, or participants had low numeracy levels. Participants integrated caseload‐volume and outcome‐rate data when forming preferences, but were influenced by reference lines on the plot to make inappropriate discriminations between institutions with similar outcome rates. With careful choice of accompanying language, funnel plots can be readily understood and are therefore a useful tool for communicating risk. However, they are less effective as a decision aid for individual patient's treatment decisions, and we recommend refinements to the standard presentation of the plots if they are to be used for that purpose.     

时间分解效应及其对跨期决策的影响

本文基于经典的分解效应, 提出并证实了一种影响人们判断与决策中时间知觉的新因素--时间分解效应。共包括两个研究, 分别在“时间够用”判断与跨期决策中检验了该效应的存在性与稳固性。实验结果表明：(1)相比未分解条件, 分解条件下的被试判断给定时间内完成某项任务的时间更够用, 即时间知觉更长。该效应受到任务难度的调节, 在较简单的任务中时间分解效应更显著; (2)在跨期决策中, 分解操纵增大了人们对较大较远的收益(larger & later, LL)选项中时间延迟的知觉, 证实了时间分解效应。此外, 还发现时间分解效应会导致人们在跨期决策中更偏好较小较近的收益(smaller & sooner, SS)选项, 对时间延迟的知觉中介了这一过程。总之, 本研究不仅在理论上提出了一种新的分解效应, 同时对现实生活中的决策(如计划制定等)有重要的应用价值。     

Depressive Cognition: A Test of Depressive Realism Versus Negativity Using General Knowledge Questions

This research is an examination of whether cognition in depressed individuals incorporates a realistic view of the world or a general tendency toward negativity. Participants provided two types of probability judgments of the likelihood that they correctly answered general knowledge questions: the probability that they correctly answered each of the individual questions and an aggregate judgment, after completing the questionnaire, of the percentage of all the questions they thought they had correctly answered. These tasks generally elicit overconfidence and accuracy in nondepressives. In accord with theories of both depressive realism and general negativity, in their item-by-item assessments of their answers to the individual questions, depressed participants demonstrated less overconfidence than nondepressed participants. In accord with the theory of general negativity but not with the theory of depressive realism, however, depressed participants demonstrated underconfidence in their aggregate judgments. The implications of these findings on theories of depressive cognition are discussed.     

The modified star graph and the petal diagram: two new visual aids for discrete alternative multicriteria decision making

Many studies have looked into the provisions of visual aids to multicriteria decision making. However, most of them have separated the display of alternative profiles and criteria weight information into two displays. This makes the analysis of the relationship between the criteria and alternatives and the effect of changing the criteria weights on the decision difficult. In this study, displays that can incorporate the display of both alternative profiles and criteria weight information for discrete alternative multicriteria decision-making problems are examined. The simple additive model is the multicriteria analysis method used. The result is two new visual aids for representing data of multicriteria decision-making problems, the modified star graph and the petal diagram. This paper discusses the two displays and compares their strengths and weaknesses. The results of a preliminary test conducted to evaluate the effectiveness of the displays are also included. © 1998 John Wiley & Sons, Ltd.     

The effects of predictive ability information,locus of control,and decision maker involvement on decision aid reliance

This study examines several factors that influence decision makers' willingness to rely on mechanical decision aids. The first experiment examined the effects of predictive ability information and locus of control on decision aid reliance. The results indicate that decision makers were more likely to rely on a decision aid when its predictive validity was not disclosed. Further, decision makers with an external locus of control relied more on the decision aid than those with an internal locus of control. The second experiment expanded upon this result to examine the interactive effects of decision maker involvement and locus of control. The results suggest that involving decision makers in the aid's development enhanced reliance. However, decision makers with an internal locus of control were more strongly influenced by this form of involvement (in terms of increasing their reliance on the decision aid) than decision makers with an external locus of control. Copyright 2001 John Wiley & Sons, Ltd.     

Trading performance,disposition effect,overconfidence, representativeness bias,and experience of emerging market investors

Using brokerage account data from China, we study investment decision making in an emerging market. We find that Chinese investors make poor trading decisions: the stocks they purchase underperform those they sell. We also find that Chinese investors suffer from three behavioral biases: (i) they tend to sell stocks that have appreciated in price, but not those that have depreciated in price, consistent with a disposition effect, acknowledging gains but not losses; (ii) they seem overconfident; and (iii) they appear to believe that past returns are indicative of future returns (a representativeness bias). In comparisons to prior findings, Chinese investors seem more overconfident than U.S. investors (i.e., the Chinese hold fewer stocks, yet trade very often) and their disposition effect appears stronger. Finally, we categorize Chinese investors based on proxy measures of experience and find that “experienced” investors are not always less prone to behavioral biases than are “inexperienced” ones. Copyright © 2007 John Wiley & Sons, Ltd.     

Confidence and decision type under matched stimulus conditions: overconfidence in perceptual but not conceptual decisions

Within the domain of metacognition, there is disagreement whether different processes underlie evaluations of confidence in perceptual versus conceptual decisions. The relationship between confidence and accuracy for perceptual and conceptual decisions was compared using newly created stimuli that could be used to elicit either decision type. Based on theories of Brunswikian and Thurstonian uncertainties, significant underconfidence for perceptual decisions and overconfidence for conceptual decisions were predicted. Three within‐subjects experiments did not support this hypothesis. Participants showed significant overconfidence for perceptual decisions and no overconfidence for conceptual decisions. In addition, significant hard‐easy effects were consistently found for both decision types. Incorporating our findings with past results reveals that both over‐ and underconfidence are attainable on perceptual tasks. This conclusion, in addition to the common presence of hard‐easy effects and significant across‐task correlations in over/underconfidence, suggests that confidence judgments for the two decision types may depend on largely shared processes. Possible contributions to confidence and over/underconfidence are explored, focusing on response time factors and participants' knowledge bases. Copyright © 2007 John Wiley & Sons, Ltd.     

Identifying the Effects of Unjustified Confidence versus Overconfidence: Lessons Learned from Two Analytic Methods

One of the most common findings in behavioral decision research is that people have unrealistic beliefs about how much they know. However, demonstrating that misplaced confidence exists does not necessarily mean that there are costs to it. This paper contrasts two approaches toward answering whether misplaced confidence is good or bad, which we have labeled the overconfidence and unjustified confidence approach. We first consider conceptual and analytic issues distinguishing these approaches. Then, we provide findings from a set of simulations designed to determine when the approaches produce different conclusions across a range of possible confidence–knowledge–outcome relationships. Finally, we illustrate the main findings from the simulations with three empirical examples drawn from our own data. We conclude that the unjustified confidence approach is typically the preferred approach, both because it is appropriate for testing a larger set of psychological mechanisms as well as for methodological reasons. Copyright © 2013 John Wiley & Sons, Ltd.     

Collective decision making reduces metacognitive control and increases error rates,particularly for overconfident individuals

This research aimed to investigate the changes in judgment accuracy, confidence, control thresholds, and decision outcomes when people act in two-person groups (dyads) compared with acting individually. First, we used interacting dyads to determine the metacognitive and behavioral outcomes of collective decision making and compared them with those of individuals. Second, we examined whether these changes were related to the trait-confidence and bias of individuals working together. Using a within-person design, undergraduate psychology students (N = 116) completed a General-knowledge Test individually, then together as a dyad. Each question was accompanied by a confidence rating and a decision to bet $10 on the answer. Dyads had significantly higher confidence and lower control thresholds than individuals. They were also significantly more decisive (made more bets) and reckless (lost a higher rate of bets) than when working alone. Thus, we observed a higher rate of decision errors for groups than individuals. The results also demonstrated the important role of individual differences: Overconfident individuals became even more confident, decisive, and reckless when working together compared with less confident or underconfident individuals working together. These findings have important theoretical and applied implications for collective decision making; metacognitive bias and potentially control thresholds may be targeted to alleviate the larger error rates and guide the formation of more effective groups.     

Cognitive adaptation and its consequences: a test of cognitive continuum theory

Cognitive Continuum Theory (CCT) is an adaptive theory of human judgement and posits a continuum of cognitive modes anchored by intuition and analysis. The theory specifies surface and depth task characteristics that are likely to induce cognitive modes at different points along the cognitive continuum. The current study manipulated both the surface (information representation) and depth (task structure) characteristics of a multiple‐cue integration threat assessment task. The surface manipulation influenced cognitive mode in the predicted direction with an iconic information display inducing a more intuitive mode than a numeric information display. The depth manipulation influenced cognitive mode in a pattern not predicted by CCT. Results indicate this difference was due to a combination of task complexity and participant satisfacing. As predicted, analysis produced a more leptokurtic error distribution than intuition. Task achievement was a function of the extent to which participants demonstrated an analytic cognitive mode index, and not a function of correspondence, as predicted. This difference was likely due to the quantitative nature of the task manipulations. Copyright © 2000 John Wiley & Sons, Ltd.     

The influence of decision heuristics and overconfidence on multiattribute choice: A process-tracing study

In the present study it was shown that decision heuristics and confidence judgements play important roles in the building of preferences. Based on a dual-process account of thinking, the study compared people who did well versus poorly on a series of decision heuristics and overconfidence judgement tasks. The two groups were found to differ with regard to their information search behaviour in introduced multiattribute choice tasks. High performers on the judgemental tasks were less influenced in their decision processes by numerical information format (probabilities vs. frequencies) compared to low performers. They also looked at more attributes and spent more time on the multiattribute choice tasks. The results reveal that performance on decision heuristics and overconfidence tasks has a bearing both on heuristic and analytic processes in multiattribute decision making.     

The effects of physical contact and decision type on moral decision making: A study of harm to save moral behavior

This study examined the relationship between physical contact and decision type in predicting “harm to save” behavior. Participants were assigned to making either a judgment or a choice involving moral dilemmas. All participants were presented with dilemmas that either required or did not require having physical contact with potential victims. Participants were asked to decide whether to sacrifice fewer people to save more (utilitarian responses) or not to do so and thus more people would die (deontological responses). The study sample included 345 participants who completed a set of self‐report measures. Results indicated an interaction between physical contact and decision type. In the choice condition only, participants reported significantly less utilitarian responses to the dilemmas that required having physical contact with the person to be harmed than to dilemmas that did not require physical contact. This difference was not found in the judgment condition. These results contribute to a greater understanding of the nature and potential malleability of human morality.     

True overconfidence: The inability of rational information processing to account for apparent overconfidence

The better-than-average effect describes the tendency of people to perceive their skills and virtues as being above average. We derive a new experimental paradigm to distinguish between two possible explanations for the effect, namely rational information processing and overconfidence. Experiment participants evaluate their relative position within the population by stating their complete belief distribution. This approach sidesteps recent methodology concerns associated with previous research. We find that people hold beliefs about their abilities in different domains and tasks which are inconsistent with rational information processing. Both on an aggregated and an individual level, they show considerable overplacement. We conclude that overconfidence is not only apparent overconfidence but rather the consequence of a psychological bias.     

The Effect of a Computerized Decision Aid on the Development of Knowledge

This study provides evidence on how the use of a computerized decision aid affects knowledge acquisition. While the intent of such computer-based decision aids is to improve and support unaided human judgments, it is unclear whether the use of the aids actually facilitate knowledge transfer. Seventy-six subjects completed a hypothetical decision task where one of two types of decision aids was used: an expert system or traditional textual materials. Results suggest that those using a computer-based decision aid acquired and encoded in memory less declarative knowledge than those using textual reference materials. Implications of the findings are discussed.     

The Influence of Confirmation Bias on Memory and Source Monitoring

Two experiments were conducted to examine whether recognition memory for information and/or its source are influenced by confirmation bias. During Phase 1, subjects were shown a summary about the issue of gun control and asked to indicate a position on the issue. During Phase 2, 12 abstracts (Experiment 1) or social media posts (Experiment 2) were shown, one at a time. Posts in Experiment 2 were associated with either friends or strangers. Participants indicated whether they wanted to read a more extensive version of each abstract (Experiment 1) or post (Experiment 2). Phase 3 was the memory phase. Thirty-two abstract titles (Experiment 1) or posts (Experiment 2) were shown one at a time. Participants indicated yes or no, and whether they recognized the titles/posts from the last phase. Recognition memory for information that supported the participants' viewpoint was higher than that for opposing information.     

Fit between decision mode and processing style predicts subjective value of chosen alternatives

Intuition is associated with a global processing style, whereas deliberation is associated with a local processing style. Drawing on previous research on the effects of decisional fit on the subjective value attached to chosen alternatives, we examined the possibility that a fit between processing style and decision mode results in greater subjective value than a lack of fit. In three experiments employing various combinations of naturally occurring and experimentally manipulated processing styles and decision modes, we found that when congruence was high (i.e., global processing style and intuitive judgment, or local processing style and deliberative judgment), participants judged their chosen item to be more expensive than when congruence was low. These findings indicate that increased fit resulted in higher estimated value. We discuss implications for judgment and decision‐making.     

The Development of Judgment and Decision Making During Childhood and Adolescence

Research on adult judgment and decision making has focused on deviations from normative models, demonstrating biases and reliance on heuristic shortcuts, thus presenting a very different picture than developmental theories that describe a unidirectional progression toward greater logic and efficiency. Recent research related to this apparent contradiction indicates that children develop competencies to reason effectively and make normative decisions, but also develop biased judgment strategies that are used inappropriately in some situations. We suggest potential explanations for the findings, highlighting the need to consider models that incorporate development in both experiential and analytic information processing systems.     

Confidence in Dyadic Decision Making: The Role of Individual Differences

Groups typically express more confidence than individuals, yet how individual‐level confidence combines during collaborative decision tasks is not well understood. We prescreened 686 community members using a novel confidence measure (a true/false trivia test) intentionally designed to be difficult (accuracy rates were not significantly better than chance) and randomly assigned 72 individuals to collaborate on a matched version of the same test in dyads composed of two low‐confidence individuals, two high‐confidence individuals, or one of each (“mixed”). Consistent with past research, we found that the confidence expressed by dyads was higher than the confidence expressed by individuals; importantly, however, this pattern varied markedly by dyad type, with low‐confidence dyads showing the largest increase, mixed dyads showing a moderate increase, and high‐confidence dyads showing no increase—despite the fact that all dyads showed similarly low accuracy (about 55%). These results highlight the conditions under which groups express greater confidence than individuals and offer insights for the composition of collaborative decision‐making teams. Copyright © 2015 John Wiley & Sons, Ltd.