Adaptive Anchoring Model: How Static and Dynamic Presentations of Time Series Influence Judgments and Predictions.

When attempting to predict future events, people commonly rely on historical data. One psychological characteristic of judgmental forecasting of time series, established by research, is that when people make forecasts from series, they tend to underestimate future values for upward trends and overestimate them for downward ones, so-called trend-damping (modeled by anchoring on, and insufficient adjustment from, the average of recent time series values). Events in a time series can be experienced sequentially (dynamic mode), or they can also be retrospectively viewed simultaneously (static mode), not experienced individually in real time.

Learning the value of money from stochastically varying prices.

In 3 experiments, the authors investigated learning of the value of money from product prices in an unfamiliar currency when the prices are proportional to quantity. In support of the second stage of a hypothesized 2-stage process of learning, Experiment 1, in which 32 undergraduates participated, shows that response times for inferences of quantity are longer when participants are presented with quantity-price pairs than when they are presented with price-quantity pairs. Experiments 2 and 3, in which 54 and 34 undergraduates participated, respectively, show that (a) stochastic price variation causes systematic errors in the learning of unit prices from quantity-price pairs as a result of judgmental regression effects and (b) in support of the 2-stage learning hypothesis, inferences of quantity are the inverse of the learned unit prices.

Optimism as modifier of escalation of commitment.

To study whether optimism-pessimism modifies escalation of commitment, 52 undergraduates were told that they had made an unsuccessful investment, then they chose to continue or discontinue this investment. Optimism about future returns was induced in one group by varying the probability of a successful outcome from an initial low to medium, pessimism was induced in another group by varying this probability from an initial high to medium. Supporting the assumption of the manipulation, the results showed that optimistic participants preferred to continue investments whereas pessimistic participants preferred not to.

Learning the value of a new currency from prices.

In European countries, field studies investigate how citizens acquire knowledge of the new currency, the euro. In 3 laboratory experiments, the authors recruited 168 undergraduates to examine whether such accurate knowledge is acquired from learning prices in the new currency. The results show fast learning of prices of duration of cellular phone calls (quantity) when the prices were proportional to quantity.

Impact of decision goal on escalation.

This research investigates the sunk-cost effect or escalation defined as the irrational tendency to choose to continue to invest money, time, or effort following unsuccessful investments. Building on previous research demonstrating a loss-sensitivity principle in sequential decision making, the hypothesis was proposed that a loss-minimization goal would lead to stronger effects of sunk outcomes (prior gains and losses) than would a gain-maximizing goal. The hypothesis was investigated in three experiments with undergraduates responding to investment decision scenarios.