Decision Anomalies, Experimenter Assumptions, and Participants' Comprehension: Revaluating the Uncertainty Effect

Abstract

Identifying discrepancies between normative prescriptions and actual behavior constitutes an important facet of studying judgment and decision making. Notwithstanding, alleged normative violations should be submitted to the most stringent tests before their existence is recognized. The present paper centers on participants' understanding of instructions and comprehension of the experimental task. As an example, we examine the "uncertainty effect" which, supposedly, violates canonical requirements of the theory of rational choice. Following this effect, people often value a lottery less than its worst possible realization, due to the uncertainty associated with the lottery. We empirically demonstrate that Gneezy et al.'s instructions were ambiguous. We show that only participants who miscomprehended the instructions exhibited a response pattern consistent with the uncertainty effect. Removing the ambiguity results in the elimination of the effect. Broader implications for the judgment and decision making literature are briefly discussed. © 2008 John Wiley & Sons, Ltd.