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On the Misperception of Variability

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  • 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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    File URL: http://ratio.huji.ac.il/sites/default/files/publications/dp285.pdf
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    Cited by:

    1. Alessandro Innocenti & Patrizia Latturolo & Maria Grazia Pazienza, 2009. "Heuristics and Biases in Travel Mode Choice," Working Papers 09_5, SIET Società Italiana di Economia dei Trasporti e della Logistica.
    2. 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.
    3. 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.
    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. 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.
    6. 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.

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