The impact of distribution properties on sampling behavior
Thai Quoc Cao, Benjamin Scheibehenne

TL;DR
People tend to focus on rare outcomes when making decisions, which affects their estimates of average ratings in online shopping tasks.
Contribution
The study shows that people adjust their estimates based on rare outcomes, revealing a cognitive process to correct sampling bias.
Findings
Participants sampled rare outcomes more than expected, showing a sampling bias.
Estimates moved closer to the true mean, especially with more samples, indicating cognitive adjustment.
Despite adjustments, estimates still deviated from the true mean by about 9.3% on average.
Abstract
People often have their decisions influenced by rare outcomes, such as buying a lottery and believing they will win, or not buying a product because of a few negative reviews. Previous research has pointed out that this tendency is due to cognitive issues such as flaws in probability weighting. In this study we examine an alternative hypothesis: that people’s search behavior is biased by rare outcomes, and they can adjust the estimation of option value to be closer to the true mean, reflecting cognitive processes to adjust for sampling bias. We recruited 180 participants through Prolific to take part in an online shopping task. On each trial, participants saw a histogram with five bins, representing the percentage of one- to five-star ratings of previous customers on a product. They could click on each bin of the histogram to examine an individual review that gave that product the…
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Taxonomy
TopicsDecision-Making and Behavioral Economics · Forecasting Techniques and Applications · Economic and Environmental Valuation
