12 Questions
What are the two ways of providing forecast information compared in the laboratory experiment?
Probability and recommendation
What is the potential value of an unequivocal recommendation in decision making?
To sidestep errors boundedly rational decision makers are prone to make
What is the potential downside of an unequivocal recommendation that proves incorrect?
Inducing a cry wolf effect, reducing compliance with future recommendations
In what game did subjects participate in Study 1 of the experiment?
Cost-loss game
What were the four forecast information conditions in Study 1?
Neither (no forecast information), Probability, Recommendation, Both
What did Study 2 compare to the recommendation only and recommendation and probability conditions?
Detailed explanation of how the recommendation is determined
What is the finding regarding the efficacy of forecast formats for inducing expected value optimal actions?
Probability and recommendation forecasts increase the frequency of expected value optimal actions.
How does a combination forecast, providing both recommendation and probability, compare to individual approaches?
A combination forecast captures most of the benefits of the individual recommendation and probability forecasts.
What was the finding from Study 2 regarding the impact of explaining how recommendation is determined on the frequency of taking status quo or siren action?
Explaining how recommendation is determined did not significantly improve the frequency of taking either status quo or siren action.
How does adding probability information on top of a recommendation affect the frequency of taking status quo and siren actions?
Adding probability information increases the frequency of taking siren action when it is optimal and somewhat decreases the frequency of taking the status quo action when it is optimal.
What role did risk aversion play in explaining the differences in efficacy between probability and recommendation forecasts?
Risk aversion did not fully explain the differences in performance between probability and recommendation forecasts, although it may play some role.
What is the impact of the cry wolf effect on recommendation forecasts?
The cry wolf effect reduces the decision maker's adherence to future recommendations when the unequivocal recommendation turns out to be wrong in hindsight.
Explore the effectiveness of using probabilities versus unequivocal recommendations in making decisions under risk. Learn about decision theory and how different approaches can impact decision-making processes.
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