Prospect evaluation as a function of numeracy and probability denominator
Related Experiment Video
Updated: Apr 17, 2026

Multimedia Battery for Assessment of Cognitive and Basic Skills in Mathematics BM-PROMA
Published on: August 28, 2021
Philip Millroth1, Peter Juslin1
1Uppsala University, Uppsala, Sweden.
Abstract:
This study examines how numeracy and probability denominator (a direct-ratio probability, a relative frequency with denominator 100, a relative frequency with denominator 10,000) affect the evaluation of prospects in an expected-value based pricing task. We expected that numeracy would affect the results due to differences in the linearity of number perception and the susceptibility to denominator neglect with different probability formats. An analysis with functional measurement verified that participants integrated value and probability into an expected value. However, a significant interaction between numeracy and probability format and subsequent analyses of the parameters of cumulative prospect theory showed that the manipulation of probability denominator changed participants' psychophysical response to probability and value. Standard methods in decision research may thus confound people's genuine risk attitude with their numerical capacities and the probability format used.
Related Concept Videos
Testing a Claim about Population Proportion
There are two methods of testing a claim about a population proportion: (1) Using the sample proportion from the data where a binomial distribution is approximated to the normal distribution and (2) Using the binomial probabilities calculated from the data.
The first method uses normal distribution as an approximation to the binomial distribution. The requirements are as follows: sample size is large...
Probability in Statistics
An example of a simple event is a coin toss. The result of a coin toss is either a head or a tail. Here, head and tail are two simple events. These two simple events make up the sample space. Further, the probability of an event occurring falls within the range of 0 to 1. The probability of an...
Unusual Results
According to the range rule of thumb, any value above or below two standard deviations, 2σ from the mean, μ is considered unusual.
Maximum unusual value =...
Numerical Calculations
The solution to a problem is obtained using different methods. While manually solving algebraic symbols is one of the most common methods, the graphical method is often preferred. Computers...
Review and Preview
Percentiles are a type of fractile that partition data into...
Review and Preview
