Dual process theories

A key for understanding the diversification bias?

Christoph Kogler, Anton Kuehberger*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The diversification bias in repeated lotteries is the finding that a majority of participants fail to select the option offering the highest probability. This phenomenon is systematic and immune to classical manipulations (e.g. monetary rewards). We apply dual process theories and argue that the diversification bias is a consequence of System 1 (automatic, intuitive, associative) triggering a matching response, which fails to be corrected by System 2 (intentional, analytic, rational). Empirically, supporting the corrective functions of System 2 through appropriate contextual cues (describing the task as a statistical test rather than as a lottery) led to a decrease of diversification.

Original languageEnglish
Pages (from-to)145-154
Number of pages10
JournalJournal of Risk and Uncertainty
Volume34
Issue number2
DOIs
Publication statusPublished - Apr 2007
Externally publishedYes

Keywords

  • dual process theories
  • diversification
  • probability matching
  • statistical independence
  • VARIETY-SEEKING
  • PROBABILITY
  • CHOICE
  • RATIONALITY
  • PERSPECTIVE

Cite this

@article{5fbdb1a5b7524b96b984afc5fc8093d0,
title = "Dual process theories: A key for understanding the diversification bias?",
abstract = "The diversification bias in repeated lotteries is the finding that a majority of participants fail to select the option offering the highest probability. This phenomenon is systematic and immune to classical manipulations (e.g. monetary rewards). We apply dual process theories and argue that the diversification bias is a consequence of System 1 (automatic, intuitive, associative) triggering a matching response, which fails to be corrected by System 2 (intentional, analytic, rational). Empirically, supporting the corrective functions of System 2 through appropriate contextual cues (describing the task as a statistical test rather than as a lottery) led to a decrease of diversification.",
keywords = "dual process theories, diversification, probability matching, statistical independence, VARIETY-SEEKING, PROBABILITY, CHOICE, RATIONALITY, PERSPECTIVE",
author = "Christoph Kogler and Anton Kuehberger",
year = "2007",
month = "4",
doi = "10.1007/s11166-007-9008-7",
language = "English",
volume = "34",
pages = "145--154",
journal = "Journal of Risk and Uncertainty",
issn = "0895-5645",
publisher = "Springer",
number = "2",

}

Dual process theories : A key for understanding the diversification bias? / Kogler, Christoph; Kuehberger, Anton.

In: Journal of Risk and Uncertainty, Vol. 34, No. 2, 04.2007, p. 145-154.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Dual process theories

T2 - A key for understanding the diversification bias?

AU - Kogler, Christoph

AU - Kuehberger, Anton

PY - 2007/4

Y1 - 2007/4

N2 - The diversification bias in repeated lotteries is the finding that a majority of participants fail to select the option offering the highest probability. This phenomenon is systematic and immune to classical manipulations (e.g. monetary rewards). We apply dual process theories and argue that the diversification bias is a consequence of System 1 (automatic, intuitive, associative) triggering a matching response, which fails to be corrected by System 2 (intentional, analytic, rational). Empirically, supporting the corrective functions of System 2 through appropriate contextual cues (describing the task as a statistical test rather than as a lottery) led to a decrease of diversification.

AB - The diversification bias in repeated lotteries is the finding that a majority of participants fail to select the option offering the highest probability. This phenomenon is systematic and immune to classical manipulations (e.g. monetary rewards). We apply dual process theories and argue that the diversification bias is a consequence of System 1 (automatic, intuitive, associative) triggering a matching response, which fails to be corrected by System 2 (intentional, analytic, rational). Empirically, supporting the corrective functions of System 2 through appropriate contextual cues (describing the task as a statistical test rather than as a lottery) led to a decrease of diversification.

KW - dual process theories

KW - diversification

KW - probability matching

KW - statistical independence

KW - VARIETY-SEEKING

KW - PROBABILITY

KW - CHOICE

KW - RATIONALITY

KW - PERSPECTIVE

U2 - 10.1007/s11166-007-9008-7

DO - 10.1007/s11166-007-9008-7

M3 - Article

VL - 34

SP - 145

EP - 154

JO - Journal of Risk and Uncertainty

JF - Journal of Risk and Uncertainty

SN - 0895-5645

IS - 2

ER -