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On the Misperception of Variability

Author

Listed:
  • Yaakov Kareev
  • Sharon Arnon
  • Reut Horwitz-Zeliger

Abstract

Ever since the days of Francis Bacon it has been claimed that people perceive the world as less variable and more regular than it actually is. Such misperception, if shown to exist, could explain a host of perplexing behaviors. However, the only evidence supporting the claim is indirect, and there is no explanation of its cause. As a possible cause, we suggest the use of sample variability as an estimate of population variability. This is so since the sampling distribution of sample variance is downward attenuated, the attenuation being substantial for sample sizes that people are likely to consider. The results of five experiments show that people use sample variability, uncorrected for sample size, in tasks in which a correction is normatively called for, and indeed perceive variability as smaller than it actually is.

Suggested Citation

  • Yaakov Kareev & Sharon Arnon & Reut Horwitz-Zeliger, 2002. "On the Misperception of Variability," Discussion Paper Series dp285, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    • Handle: RePEc:huj:dispap:dp285
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    Cited by:

    1. Crosetto, Paolo & Filippin, Antonio & Katuščák, Peter & Smith, John, 2020. "Central tendency bias in belief elicitation," Journal of Economic Psychology, Elsevier, vol. 78(C).
    2. Jordan Tong & Daniel Feiler, 2017. "A Behavioral Model of Forecasting: Naive Statistics on Mental Samples," Management Science, INFORMS, vol. 63(11), pages 3609-3627, November.
    3. Myrto Pantazi & Olivier Klein & Mikhail Kissine, 2020. "Is justice blind or myopic? An examination of the effects of meta-cognitive myopia and truth bias on mock jurors and judges," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(2), pages 214-229, March.
    4. Greg Barron & Eldad Yechiam, 2009. "The coexistence of overestimation and underweighting of rare events and the contingent recency effect," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(6), pages 447-460, October.
    5. repec:cup:judgdm:v:4:y:2009:i:6:p:447-460 is not listed on IDEAS
    6. Yaakov Kareev & Massimo Warglien, 2003. "Cognitive Overload and the Evaluation of Risky Alternatives: The Effects of Sample Size, Information Format and Attitude To Risk," Discussion Paper Series dp340, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    7. Alessandro Innocenti & Patrizia Lattarulo & Maria Grazia Pazienza, 2009. "Heuristics and Biases in Travel Mode Choice," Labsi Experimental Economics Laboratory University of Siena 027, University of Siena.
    8. Erel Avineri & Joseph Prashker, 2006. "The Impact of Travel Time Information on Travelers’ Learning under Uncertainty," Transportation, Springer, vol. 33(4), pages 393-408, July.
    9. Marcus Lindskog & Anders Winman, 2014. "Are All Data Created Equal? - Exploring Some Boundary Conditions for a Lazy Intuitive Statistician," PLOS ONE, Public Library of Science, vol. 9(5), pages 1-10, May.
    10. Innocenti, Alessandro & Lattarulo, Patrizia & Pazienza, Maria Grazia, 2013. "Car stickiness: Heuristics and biases in travel choice," Transport Policy, Elsevier, vol. 25(C), pages 158-168.
    11. repec:cup:judgdm:v:15:y:2020:i:2:p:214-229 is not listed on IDEAS
    12. Yaakov Kareev & Klaus Fiedler, 2003. "On the Accentuation of Contingencies: The Sensitive Research Designer versus the Intuitive Statistician," Discussion Paper Series dp346, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    13. Sulian Wang & Chen Wang, 2021. "Quantile Judgments of Lognormal Losses: An Experimental Investigation," Decision Analysis, INFORMS, vol. 18(1), pages 78-99, March.

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