The influence of sample size on preferences from experience

Area of Science:

• Cognitive Psychology
• Decision Science
• Behavioral Economics

Background:

• Individuals frequently learn about the outcomes of uncertain or risky options through direct experience.
• Decision-making from experience often involves actively sampling information from potential choices, typically with small sample sizes.

Purpose of the Study:

• To investigate the impact of sample size experienced from risky gambles on decision-making preferences.
• To analyze how varying sample sizes influence subjective selling prices and confidence in judgments.

Main Methods:

• Two studies were conducted with 40 participants each.
• Sample size from risky gambles was manipulated.
• Subjective selling prices and confidence in judgments were measured post-sampling.

Main Results:

• On average, sample size did not significantly affect selling prices or confidence.
• Cognitive modeling identified two distinct learning strategies: Bayesian and frequentist.
• Bayesian learners' selling prices varied with sample size as predicted, while frequentist learners showed minimal impact.

Conclusions:

• Individual learning strategies significantly influence how people process experienced information from risky options.
• The observed variability in learning (Bayesian vs. frequentist) explains why sample size effects on judgments are often inconsistent.
• Cognitive simplicity may favor frequentist learning strategies, further impacting sensitivity to sample size.