They found that a bias in the way people gather information leads them to take more risks when they choose a gamble from a large set of options, a phenomenon which researchers have labelled ‘search-amplified risk’. This means that, when faced with a large number of choices - each having outcomes associated with different probabilities of occurring - people are more likely to overestimate the probabilities of some of the rarest events.
The study, published in the journal Psychonomic Bulletin and Review, found that with large choice sets, people took riskier gambles based on a flawed perception that there was a higher probability of ‘winning big’ – but in reality they more often went away empty-handed.
Dr Thomas Hills of the Department of Psychology at the University of Warwick said: “It’s not that people just give up and make random decis
“People search more when they have many choices, increasing the likelihood that they will encounter rare, risky events. The problem is that they don’t sample any given choice enough to understand its underlying probabilities. This leaves the rare events sticking out like sore thumbs. As a consequence, people choose these riskier gambles more often.”...
ions when faced with a large number of options. “They are making rational decisions, but these decisions are based on faulty information gathering. The problem is with the information search strategies people use when faced with a large number of options...."....
Photo by Ralf Roletschek - Fahrradtechnik und Fotografie, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license
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