Judging a Part by the Size of its Whole: The Category Size Bias in Probability Judgments

By Aaron R. Brough (Huntsman School of Business, Utah State University) and Mathew S. Isaac (Albers School of Business and Economics, Seattle University)

Consumers might be said to have a prediction addiction—they speculate about sports, politics, weather, stocks, sweepstakes, health, and relationships, to name just a few areas. What’s more, predictions often guide their decisions. For example, they may decide to carry an umbrella after considering the chance of rain, to invest after forecasting the stock market’s performance, or to marry after predicting the likelihood of marital bliss. With all this practice, one might expect consumers to be good at judging probability. However, their predictions are often wrong.

One factor contributing to consumers’ flawed judgments is categorization; when making a prediction, consumers may be distracted by how all the possibilities are grouped. Our research looks at one aspect of categorization that hasn’t previously been explored—whether size matters. Our basic question is: can the size of its category make an outcome seem more or less likely to occur? For example, would a spectator feel that a particular Olympic skier is more likely to win an individual gold medal if many (vs. few) skiers in the race are from the same country? Similarly, would an investor expect a specific stock to perform better if many (vs. few) other stocks in the portfolio are classified into the same industry? Or would a patient’s decision to visit the doctor for a lung cancer screening be influenced by whether lung cancer is one of many (vs. few) of the diseases listed on a health brochure as being potentially preventable?

To each of these questions, the rather obvious answer is that category size shouldn’t matter. By analogy, common sense suggests that simply because a bird belongs to a large flock doesn’t mean it’s a large bird. However, we discovered that people don’t seem to apply the same logic when it comes to probability judgments, even though they should. Instead, they sometimes believe that if an outcome is grouped with many other possible outcomes into a large category, it must be more likely to occur. The problem with bundling predictions in this way is that it interferes with people’s likelihood estimates. The “real” likelihood of American Olympic skier Bode Miller winning the slalom shouldn’t be influenced by the number of Americans who also compete in the final race. And yet, when there are more Americans in the race, people may somehow think there’s a greater chance that Bode will win. We call this mistake the category size bias.

In a series of five experiments, we investigated how changes in category size affect people’s judgments about probability and found evidence of the category size bias. We examined predictions across numerous contexts, including games of chance (e.g., lotteries), games of skill (e.g., athletic competitions), and assessments of risk (e.g., security threats). We discovered that predictions can be biased by category size—even when the basis for categorization is completely irrelevant and every outcome is equally likely to occur. For example, in one experiment, participants believed that the probability of winning a lottery was higher if their ticket color happened to be the same as many (vs. few) of the other gamblers’ tickets—and they were willing to wager an average of 24% more as a result. In another experiment, participants estimated a team’s odds of winning the NCAA basketball tournament to be significantly better when the team’s mascot shared similar features with the mascots of many (vs. few) other teams. Participants in yet another experiment judged the risk of an IT security threat to be higher and were more likely to take precautions when their actions were seen as part of a large (vs. small) group of preventative behaviors.

“We found that the accuracy of people’s predictions, as well as related decisions, can be affected by meaningless groupings," Dr. Brough said. "For example, imagine a lottery in which most of the players have a blue ticket and only a few have a yellow ticket. You would correctly conclude that the winning ticket is more likely to be blue than yellow. However, you might also incorrectly conclude that if your ticket is blue you are more likely to win, and that if your ticket is yellow you are less likely to win. Even though every ticket in reality provides an equal chance of winning, people act as though their ticket somehow inherits the probability of its entire group. I like to think of it as a case when bunches change hunches.”

It’s not just that people are bad at math. Instead, they seem to confuse judgments about an entire category with judgments about an individual member of that category. There’s a difference between predicting that any diamond card will be drawn from a standard deck of 52 playing cards and predicting that a specific card (e.g., the Queen of diamonds) will be drawn. Knowing the number of cards in the diamond suit is relevant to the first prediction, but to make the second prediction all you need to know is how many cards are in the deck—categorization is irrelevant. Yet people tend to rely on information about a category when making predictions about an individual category member, and that’s where they get into trouble.

This research aims to provide consumers, businesses, and policy makers with new insights regarding how categorization—and specifically category size—can impact perceptions of risk and probability. Our findings suggest that managing how risk-related information is grouped may increase early detection of preventable diseases and encourage responsible behavior. For example, when policy makers are crafting health-related messages for consumers, grouping a highly preventable disease such as lung cancer with a large (vs. small) number of other potential health risks could increase the perceived risk of contracting lung cancer, which may in turn persuade consumers to visit their doctor for regular screenings. Similarly, to the extent that a fatality report increases perceived risk by grouping car accidents with a large (vs. small) number of avoidable causes of death, drivers may be more inclined to wear a seatbelt. On the flip side, when accurate predictions are the goal, ignoring categories and focusing instead on individual outcomes can help avoid the category size bias and improve accuracy.

Dr. Aaron Brough

Two Huntsman Teams Make it to Final Four of International Information Systems Competition

By Steve Eaton

Two Huntsman teams are finalists in an information systems competition that drew initial submissions from around the world.

The competition is sponsored by Association for Information Systems, a professional organization that earlier this year recognized the Huntsman AIS chapter with an “outstanding” designation, something given to only three other chapters in the nation last year.

Allan Follett, Chad Williams, Conner Sorensen

Chad Williams, Conner Sorensen and Allan Follett entered a contest that required them to create a video. Their production focused on explaining what the phrase “big data” means and why students who study in this area have increased job opportunities. Their video can be viewed by clicking here. They were one of four teams selected as finalists in their category for the AIS 2014 Student Chapter Conference and Competition that will be hosted by Arizona State University from March 20 – 22, 2014.

Vishal Patel and Divya Reddy competed in the IT security category. To qualify as finalists they were asked to take on a case study that involved a company with very complex IT problems that wanted to simplify its systems and get a better return on investment. That team is also one of four selected to be a finalist in the competition.

Vishal said the case studies are very similar to the type of complex problems they will face after graduation and that he considers the experience he is gaining by competing very valuable. The

Divya Reddy and Vishal Patel

students said the competition gives them a chance to showcase their skills on an international stage and to network with top industry officials. Last year Vishal was on a team that took first place in the “IT risk and identification” category. Another Huntsman team took second in the “interactive learning module” category.

“It’s very rewarding when students from around the world enter this competition and we have teams that come out on top,” said David Olsen, the head of the Management Information Systems Department. “This bodes well for our students as they enter the marketplace and it keeps the bar high for our department. Leading organizations and companies seek out Huntsman students because they know they will contribute in a big way and they want that competitive edge.”

The students are members of the Huntsman AIS student chapter which was recently recognized as an “outstanding chapter” by the AIS parent organization, an honor only four chapters in the world earned last year, according to Timothy McFall, the president of the chapter.

“Our AIS chapter competed with top schools; many of which have substantial budgets and administrative support,” said Susan Jones, the faculty advisor for the club. “This year’s top honors went to schools like the University of Alabama, University of Georgia and the University of Michigan. Our students have reason to be proud that their hard work has paid off with this recognition.”

The student chapter was judged in five areas: professional development, community service, recruitment, communications and the management of the chapter, she said.

“Being active in the chapter gives us opportunities to distinguish ourselves from our peers and to get experience, knowledge and skills that are difficult to gain in just a classroom setting,” Timothy said.

Marketing Week Preview

By Allie Jeppson

In the past few years the Huntsman Marketing Program has witnessed an immense amount of growth and this year is no different with the commencement of the first-ever Marketing Week, which began Monday, March 3, and will continue through Friday, March 7.

Events began Monday with the Zagg Case Competition, where companies, like Zagg, present students with a real-life marketing scenario they are facing. Students then have a limited amount of time, in this case five days, to create and present their solutions. Case competitions such as this have been held in the past and while they’re a relatively new addition to the Huntsman School Marketing Program, they have proved valuable as students are immersed in a hands-on situation and gain real world experience.

Tuesday’s event will feature a resume-building workshop sponsored by Workday, followed by a presentation titled, “How to Land Your Dream Job with Social Media,” with marketing student and social media guru Jeremy Schumann.

Other highlights during the week will include a market research workshop hosted by Qualtrics, a marketing strategy competition, a new venture-marketing workshop, a t-shirt design competition and raffle prizewinners.

From a student’s perspective, Marketing Week is not only filled with fun activities, but provides some invaluable insight, especially for a graduating senior like myself. Many students may not realize it, but marketing is applicable to students of all studies, especially those who are graduating and looking for jobs. This is where the skill of marketing oneself comes into play and marketing week can help students to do just that

Kent Wuthrich, Zagg EVP of Marketing

30th Annual Information Technology Conference

By Brandon Layne

This year marked the 30th annual IT Conference for Partners in Business. As an organization, Partners has always strived to bring students and professionals together in a learning setting, and this year has been no exception. The topics this year were narrowed to “Data Analytics” and “Security.” The idea this year was not only to have specific subjects that attendees could choose, but also our team went to great lengths to bring in some of the best minds on these subjects from all over the nation. 

For security we went into this knowing that the subject in IT is quite broad so we brought in specialists that focused on different aspects of security. David Thaw, a law professor from Connecticut helped pass Cyber Security Laws before congress. He was able to comprehensively explain what the laws are and how they relate to us as consumers and businesses. His presentation slides as of right now are the most requested piece of information since the conference has ended.

To complement David, we brought in Branson Matheson from NASA who literally teaches classes on hacking. He taught about social engineering and how it can be used to manipulate you into giving away more information than you should. Unbeknownst to us, he posted papers around the conference simply stating, “If you want a prize, text this number." In his presentation, he showed the list of people who blindly sent their information to a stranger because they didn’t think to question it. That activity made for a pretty powerful example of the vulnerabilities in social engineering.

For those more interested in Big Data or Data Analytics, we wanted to focus on teaching business owners what they should do with the data that they already had. We brought in Zachary Howes, Service Engineering Manager for Microsoft, to talk about an under-the-hoods view of what it takes to process over 7 billion rows of telemetry a minute for Microsoft services. He taught about different ways that Microsoft is changing and adapting to handle its constantly growing organization. Our other speakers, Neil Nickolaisen, Richard Wellman, and John Johnson, focused on different techniques to sorting and visualizing the data that you have.

Our opening keynote was Cydni Tetro who works for Disney and specializes in 3D printing. She taught us about what the realistic future of 3D printing is and how it will change many things for the better at a lower cost.

I would say that overall, the students and attendees who participated came away with a better understanding of the power of data and information, the importance of security, and the steps we all need to take to stay ahead of these ever changing technologies.