IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v52y2006i1p111-127.html
   My bibliography  Save this article

Intuitions About Combining Opinions: Misappreciation of the Averaging Principle

Author

Listed:
  • Richard P. Larrick

    () (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

  • Jack B. Soll

    () (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

Abstract

Averaging estimates is an effective way to improve accuracy when combining expert judgments, integrating group members' judgments, or using advice to modify personal judgments. If the estimates of two judges ever fall on different sides of the truth, which we term bracketing, averaging must outperform the average judge for convex loss functions, such as mean absolute deviation (MAD). We hypothesized that people often hold incorrect beliefs about averaging, falsely concluding that the average of two judges' estimates would be no more accurate than the average judge. The experiments confirmed that this misconception was common across a range of tasks that involved reasoning from summary data (Experiment 1), from specific instances (Experiment 2), and conceptually (Experiment 3). However, this misconception decreased as observed or assumed bracketing rate increased (all three studies) and when bracketing was made more transparent (Experiment 2). Experiment 4 showed that flawed inferential rules and poor extensional reasoning abilities contributed to the misconception. We conclude by describing how people may face few opportunities to learn the benefits of averaging and how misappreciating averaging contributes to poor intuitive strategies for combining estimates.

Suggested Citation

  • Richard P. Larrick & Jack B. Soll, 2006. "Intuitions About Combining Opinions: Misappreciation of the Averaging Principle," Management Science, INFORMS, vol. 52(1), pages 111-127, January.
  • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:1:p:111-127
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1050.0459
    Download Restriction: no

    References listed on IDEAS

    as
    1. Clemon, Robert T & Winkler, Robert L, 1986. "Combining Economic Forecasts," Journal of Business & Economic Statistics, American Statistical Association, vol. 4(1), pages 39-46, January.
    2. Clemen, Robert T., 1989. "Combining forecasts: A review and annotated bibliography," International Journal of Forecasting, Elsevier, vol. 5(4), pages 559-583.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:52:y:2006:i:1:p:111-127. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.