Effects of Problem Schema on Successful Maximizing in Repeated Choices Jie Gao ([email protected]) Center for Decision Sciences, Columbia University New York, NY 10027 USA James E. Corter ([email protected]) Teachers College, Columbia University New York, NY 10027 USA Abstract Regarding statistical concepts, Nisbett, Krantz, Jepson, and Kunda (1983) argue that people learn intuitive versions We investigate the effects of problem schema type (complementary events versus independent events) on of abstract principles such as the law of large numbers participants’ tendency to adopt probability matching or through life experience in various domains. These maximizing strategies across repeated decisions. These two representations are often referred to as statistical heuristics. general problem types were compared in an online study These heuristics can be improved by statistical training and (N=300), using a between-subjects design. We also varied successfully applied across domains (Fong, Krantz & abstraction level of the problem story context, using abstract Nisbett, 1986). Nonetheless, people do not always use contexts, contexts involving physical randomizing devices, and “real-world” social/pragmatic contexts. Participants made statistical reasoning when it is appropriate (e.g., Tversky & a binary choice on each of 20 trials, receiving trial-by-trial Kahneman, 1974). Accordingly, Nisbett et al. argue that it outcome feedback. Maximization was consistently higher for is important to study what kinds of events and problems independent events contexts than for complementary, while most often elicit statistical reasoning. They list three factors abstraction level of the context had no significant effect on that affect whether statistical reasoning is applied in a the prevalence of maximizing behavior. The results support particular context: the clarity of the sample space and the our hypothesis that people may find it especially difficult to sampling process, the perceived relevance of chance factors, discover the maximizing strategy for problems exemplifying the complementary-outcomes schema. In contrast, when the and cultural norms for the specific domain. problem involves choosing between two distinct objects or We believe that such pragmatic or semantic factors can entities (a common instantiation of the independent events affect learning and application of formal knowledge across a schema) it seems to be easier to maximize, perhaps due to broad array of tasks, including optimal versus non-optimal cueing of a pragmatic “pick the winner” schema. choices in decision making. Thus, in the present paper we Keywords: probability matching; maximizing; repeated investigate the influence of such prior pragmatic knowledge decisions; pragmatic schemas; abstraction on people’s ability to find and select the “rational” or optimal strategy in repeated random binary choices, a Introduction situation where sub-optimal behavior (specifically, It has been shown that past experience has an important probability matching) is not infrequent. impact on people’s reasoning and decision making. In one To illustrate, imagine Situation 1, wherein a die with two influential line of research, Cheng and Holyoak (1985) faces colored black and four colored red is rolled, and argue that people often reason not according to the rules of suppose that your task is to predict the color that will occur formal logic, but based on a set of abstract (or partly on each of the next five rolls. Now imagine Situation 2, abstract) knowledge structures induced from daily-life where there are two dice, the first colored as above and the experience. They term these knowledge structures second with the colors reversed. Here, your task is to predict “pragmatic reasoning schemas”. These pragmatic schemas which die will show red, on each of five successive trials. have been shown to affect people’s perceptions, problem Although the two situations share many surface features solving and decision making. For example, many studies (and the same objective probability of success on each trial, have shown that reasoning problems that are situated in a if you pick the more likely outcome), we believe that they real-world context are solved more easily than those posed are psychologically different, that they are associated with in purely abstract forms (Evans, 1982; Johnson-Laird et al., different experience-based pragmatic schema. In the first 1972; Wason, 1966; Wason & Evans, 1975). Other example, the two possible outcomes, black and red, are not researchers have found a significant impact of previous life just negatively correlated, they are complementary events. experience on perception and cognition, both experience in In terms of experience, this situation may be associated with the physical world (Tooby & Cosmides, 1992) and in common everyday examples of repeatedly trying to predict domains that are abstracted from or unrelated to the physical a binary outcome: Heads versus Tails, making a shot in environment (cf. Bargh, 2006). Williams, Huang and Bargh basketball versus missing it, will it be a sunny day or a rainy (2009) have used the term “mind scaffolding” to refer to day? In most of these experienced situations, the element of how higher mental processes are often grounded in early chance variation is very salient. experience of the physical world. 511 In the second situation, the two events (Die 1 shows red) The independent events (pick-a-winner) schema is an and (Die 2 shows red) are not correlated, rather they are abstraction, as is the complementary-events schema. independent events. The decision maker is in the position of However, we believe that these particular abstractions arise trying to select an entity that will offer superior outcomes. from experience, thus they retain some associations with This type of situation may recall experiences with “pick a semantic aspects of real-world situations – i.e. that they are winner” type scenarios: which player is more likely to hit a “pragmatic schemas” (Cheng & Holyoak, 1985; Marshall, free throw, which berry bush will have more berries on it? 1993; Nisbett 1993; Nisbett, Krantz, Jepson, & Kunda, In many such real-life situations, causal models might be 1983). Many researchers (e.g., Bassok, Chase, & Martin, invoked, correctly or incorrectly. 1998; Reeves & Weisberg, 1994) have demonstrated that Note that Situation 1 resembles tasks commonly used in formal reasoning methods may be more accurately used in studies of probability matching (e.g., James & Koehler, an applied context, due to the effects of experience-based 2011; Shanks, 2002; Barron & Leider, 2010), a well- semantic knowledge. Bassok and co-workers argue that the documented form of suboptimal behavior. The literature on applied or “grounded” context must map onto the abstract probability matching amply documents that people often fail schema in order for people to better understand or apply the to use maximizing strategies when making sequential reasoning rules. predictions (e.g., Chen & Corter 2006; Hertwig, Barron, If reasoning problems situated in a real-world context Weber, & Erev, 2004). Many of these studies have used tend to be solved more easily than those posed in purely tasks where participants repeatedly predict outcomes for abstract forms (Evans, 1982; Johnson-Laird et al., 1972; simple randomizing devices: coins or dice. But do the Wason, 1966; Wason & Evans, 1975), another factor that documented failures to maximize generalize beyond this may influence the prevalence of maximizing behavior is narrow situation? Or would people do better in an level of abstraction of the problem context. Accordingly, in independent-events scenario? the present study we also investigate if people do better at We hypothesize that the answer to the latter question is identifying and applying the normative strategy with affirmative. Put another way, we suspect that the failures to abstract scenarios (representing “fully abstracted” schemas maximize commonly observed in the probability-matching for complementary and independent events), or with literature may depend critically on the complementary- “grounded” story contexts involving concrete objects or outcomes nature of the prediction task. In a coin flip, or any other real-world situations (that should invoke pragmatic type of process with complementary-outcomes, observing experiential knowledge). The real-world problems are of that Heads has occurred means that Tails has not. For such two types: “concrete” problems involving simple events, most people have vast prior experience observing randomizing devices (e.g. coins, dice) that ground the mixed sequences of outcomes, as well as an appreciation of decision problems in the behavior of simple physical the futility of trying to predict the next flip. These objects, and pragmatic or social problems (games, foraging) experiences may impede their ability to find the maximizing that might be influenced by these sorts of experiences. strategy if one exists (for a biased coin that strategy involves predicting pure sequences of the more likely outcome). Empirical Study In contrast, for the independent-events situation, a This study is designed to investigate factors influencing participant does not predict the outcome of one repeated people’s ability to find and apply the normative (identical) event with binary outcomes, rather s/he is “maximizing” strategy in a repeated-decisions task. To choosing between two different and independent options, investigate the role