Psychological Bulletin Copyright 1991 by the American Psychological Association~ ln~

1991, Vol. 110, No. 3, 486--498 0033-2909/91/$3.00

Costs and Benefits of Judgment Errors: Implications for Debiasing

Hal R. Arkes
Ohio University

Some authors questioned the ecological validity of judgmental biases demonstrated in the labora-
t o ~ One objection to these demonstrations is that evolutionary pressures would have rendered
such maladaptive behaviors extinct if they had any impact in the "real world" I attempt to show that
even beneficial adaptations may have costs. I extend this argument to propose three types of
judgment errors--strategy-based errors, association-based errors, and psychophysical based
errors--each of which is a cost of a highly adaptive system. This taxonomy of judgment behaviors is
used to advance hypotheses as to which debiasing techniques are likely to succeed in each category.

During the last two decades, cognitive psychologists docu-
mented many types of judgment and decision-making errors.
Spurred in good measure by the work of Tversky and Kahne-
man (1974), the research area has come to be known as "judg-
ment under uncertainty" The relatively poor performance of
subjects in many of these judgment experiments has caused
some researchers to question the ecological validity of such
studies (e.g., Berkeley & Humphreys, 1982; Edwards, 1983;
Funder, 1987; Hogarth, 1981; Phillips, 1983). The reasoning
seems to be that because subjects' performance is so poor in
these experiments, it may not be representative of their behav-
ior in more naturalistic environments in which people seem
quite competent.
One purpose of the present article is to argue that even suc-
cessful adaptations can have costs. This position is common in
biology. Its application to the areas of judgment and decision
making will, I hope, help explain why particular judgment be-
haviors persist despite their obvious drawbacks in some situa-
tions. My goal is to show that the costs of otherwise beneficial
cognitive adaptations are the consequence of appropriate re-
spouses to environmental demands.
A second goal of this article is to propose a taxonomy of
judgment behaviors based on the nature of the adaptational
costs. The use of this taxonomy may help suggest what type of
debiasing techniques may be effective in each category of judg-
ment behavior.
Costs a n d Benefits F r o m an Evolutionary Perspective
To examine maladaptive judgment behaviors, we need to
consider what makes any characteristic adaptive. Viewed from
an evolutionary perspective, adaptive behaviors contribute to
reproductive success, although the route from good judgment
performance to reproductive success may be quite indirect. Be-
cause it is not obvious how serious judgment errors could possi-
I am grateful to Bruce Carlson and Robyn Dawes for their helpful
suggestions on an earlier draft of this article. Daniel Kahneman and
two anonymous reviewers also provided very constructive comments.
Correspondence concerning this article should be addressed to Hal
R. Arkes, Department of Psychology, Ohio University, Athens, Ohio
45701.
486
bly be adaptive, there is reason for psychologists to assume that
these maladaptive behaviors exist mainly in artificial labora-
tory environments and not in naturalistic ecologies.
However, Archer (1988) pointed out that successful adapta-
tions have costs as well as benefits. Consider first a physiologi-
cal example. In dangerous situations, the body mobilizes for a
fight or flight response. This is highly adaptive. However, pro-
longed stress will result in serious physical deterioration. This is
a maladaptive long-term consequence of a response that is gen-
erally beneficial. Hence, stomach ulceration is not grounds for
deeming the alarm reaction to be maladaptive.
A phylogenetic example is the emergence of upright gait. Al-
though upright gait has resulted in epidemic levels of lower
back pain in humans, it has resulted in substantial adaptive
consequences (e.g., freeing the hands for tool use). The benefit
outweighs the cost.
A psychological example is provided by the costs and bene-
fits of expertise (Arkes & Freedman, 1984; Arkes & Harkness,
1980). Experts have substantial background knowledge that
they can draw on to instantiate the missing slots of incomplete
schemata. They subsequently demonstrate a tendency to recall
the instantiated information as having been presented when in
fact it was not. For example, Arkes and Harkness (1980) showed
that speech therapy students who made a diagnosis of Downs
syndrome tended to remember having seen the symptom "fis-
sured tongue" However, this common symptom of Down's syn-
drome had not been presented in the actual list of symptoms.
Because nonexperts have less background knowledge, they are
less likely to make this type of error. Thus, even though we all
agree that expertise is beneficial, it does have its costs. In an
analogous way, the presence of widespread, maladaptive judg-
ment strategies is not necessarily contrary to the principles of
evolution. (See also Einhorn & Hogarth, 1981, p. 58.)
I divide the judgment and decision-making errors docu-
mented in the literature into three broad categories. Each cate-
gory of errors is a cost of an otherwise adaptive system. First, I
present a brief overview before describing each category in
more detail.
Strategy-based errors occur when subjects use a suboptimal
strategy; the extra effort required to use a more sophisticated
strategy is a cost that often outweighs the potential benefit of
 COSTS AND BENEFITS OF JUDGMENT ERRORS
enhanced accuracy. Hence, decision makers remain satisfied
with the suboptimal strategy in low-stakes situations.
Association-based errors are costs of otherwise highly adap-
tive system of associations within semantic memory. The auto-
maticity of such associations, generally of enormous benefit,
becomes a cost when judgmentally irrelevant or counterpro-
ductive semantic associations are brought to bear on the deci-
sion or judgment.
Psychophysically based errors result from the nonlinear map-
ping of physical stimuli onto psychological responses. Such
errors represent costs incurred in less frequent stimulus ranges
where very high and very low stimulus magnitudes are located.
These costs are more than offset by sensitivity gains in the more
frequent stimulus ranges located in the central portion of the
stimulus spectrum.
I now present a more detailed description of each of these
three categories of judgment errors.
Three Types o f J u d g m e n t Errors
Strategy-Based Judgment Errors
Despite the fact that poor judgment performance has been
demonstrated in a large number ofsituatious (Kahneman, Sip-
vie, & Tversky, 1982), evidence exists that some suboptimal
behaviors may be adaptive in a larger sense. Suppose a person
adopts a quick and dirty strategy to solve a problem. Because it
is quick, it is easy to execute. This is a benefit. Because it is dirty,
it results in more errors than a more meticulous strategy. This is
a cost. Although the choice of this strategy may result in fewer
correct answers compared with the other strategy, this cost may
be outweighed by the benefit of time and effort saved.
Thorngate (1980) and Johnson and Payne (1985) compared
the performance of various decision strategies with regard to
their ability to select alternatives with the highest expected
value. Some strategies were quite rudimental. For example,
some completely ignored the probability of an outcome and
only considered the average payoff for each possible choice. It
was found that many of the 10 decision strategies performed
well. Even the primitive ones selected alternatives with the high-
est expected value under some circumstances and almost never
selected alternatives with the lowest. The use of such elemen-
tary strategies would be drastically less taxing to the human
information-processiog system than would the use of more
complete but complicated ones. Hence, ifa suboptimal strategy
were to be used, the large savings in cognitive effort might far
outweigh the small loss in potential outcomes. This point was
stressed a number of years ago by Beach and Mitchell (1978).
When subjects know that the stakes are high, they often can
change from a suboptimal strategy to a better one. It is worth it
for them to do so. For example, Harkness, DeBono, and Bor-
gida (1985) asked undergraduates to perform a covariation esti-
mation task. Female subjects examined data that described
other women whom Tom did or did not want to date and
whether each of these women possessed a particular character-
istic. The presented data could be summarized as entries into a
2 × 2 matrix, such as the one presented in Figure 1. For exam-
ple, the rows of the matrix might be labeled "The woman has a
487
Tom does Tom does not
want to date want to date
this woman, this woman.
The woman has cell a cell b
a good sense
of humor. 8 4
The woman does
not have a good cell c cell d
sense of humor.
8 4
Figure 1. Example of information presented to subjects in the study
by Harkness, DeBono, and Borgida (1985). (From "Personal Involve-
ment and Strategies for Making Contingency Judgments: A Stake in
the Dating Game Makes a Difference" by A. R. I-Iarkness, K. G. De-
Bono, and E. Borgida, 1985, Journalof Personalityand Social Psychol.
ogy, 49, p. 25. Copyright 1985 by the American Psychological Associa-
tion. Adapted by permission.)
good sense of humor" and "The woman does not have a good
sense of humor: The columns might be labeled "Tom does
want to date this woman" and "Tom does not want to date this
woman7 Subjects considered these data to decide how much
Tom's liking for a woman covaried with a characteristic such as
her sense of humor. Using a procedilre developed by Shaldee
and Tucker (1980), Harkness et al. (1985) were able to deter-
mine the complexity of the strategy used by the female subjects
as they performed this covariation estimation task. In some
groups, the strategy used was rather elemental. This was not
the case, however, if the man whose preferences were being
examined was someone the female subject would be going out
with for the next 3 to 5 weeks. In this group, the women used
complex covariation estimation strategies significantly more
often. This finding is consistent with Payne's (1982) description
of contingent decision behavior. The decision behavior is con-
tingent on such factors as the reward for high levels of accuracy.
Researchers who are optimistic about human judgment and
decision-making performance point out that sensitivity to such
factors as incentive, task complexity (Billings & Marcus, 1983;
Paquette & Kida, 1988), and time pressure (Christensen-Sza-
lanski, 1980; Payne, Bettman, & Johnson, 1988) is highly adap-
tive.
Association-Based Judgment Errors
Experiments in which semantic memory has been primed
have become very common during the last 20 years. The prin-
cipal result of such studies is that priming causes an activation
of concepts related to the prime. A number o f models, such as
HAM (Anderson & Bower, 1973) and ACT* (Anderson, 1983)
among many others, posited spreading activation as a funda-
mental characteristic of semantic m e m o ~
Consider a study by Kubovy (1977). When subjects were
asked to report "the first digit that comes to m i n d ; only 2.2%
488 HAL R. ARKES
chose the digit 1. When subjects were asked to report the "first
one-digit number that comes to m i n d ; 18% chose 1. This result
is consistent with the tenets of spreading activation. The second
group of subjects is much more likely to respond with a I be-
cause that digit was primed by the request to report a one-digit
number.
If we consider the first group to be the control group because
they were asked the question in a more neutral manner, should
we then consider the response o f the second group to be a
manifestation of bias? Have these subjects made a judgment
error?
The relatively high probability of reporting the digit I as the
first one-digit number to come to mind is a consequence o f the
spreading activation characteristic o f semantic memory The
fact that related concepts in semantic memory influence each
other through this activation is essential to normal cognitive
functioning) The benefits o f spreading activation include some
of the most fundamental cognitive tasks: stimulus generaliza-
tion, inference, and transfer o f training, for example. These
substantial benefits o f spreading activation are accompanied by
a cost, which Kubovy (1977) demonstrated, namely, the inabil-
ity of humans to prevent associated items from influencing
their cognition even when those related items are irrelevant or
counterproductive to judgmental accuracy.
An experiment by Gilovich (1981) serves as an example from
the judgment literature. Newspaper sportswriters rated the po-
tential of various hypothetical college players to become profes-
sional football players. I f a college player was said to have come
from the same hometown as a current professional football
player, the college player was rated much higher than if he grew
up in some other town. If we assume that one's hometown has
little to do with one's potential as a professional football player,
then we must attribute the higher rating to the fact that the
mere association between the to-be-rated player and the suc-
cessful professional player was responsible for the higher rating.
Another example is provided by Gregory, CiaMini, and Car-
penter (1982). People who were instructed to imagine experi-
encing certain events subsequently rated those events as more
likely to occur to them compared with subjects who did not
previously imagine them. Gregory et al. (1982) explained their
results in terms o f availability (Tversky & Kahneman, 1973).
Through the activity o f imagining, items are made more avail-
able in long-term memory As a result such items are judged to
be more probable. Whereas Kubovy (1977) increased the avail-
ability o f the digit 1 by mentioning it in an unobtrusive manner,
Gregory et al. were able to increase the availability o f scenarios
by blatantly asking subjects to imagine their occurrence. In
both cases the experimenters exploited the normal working o f
the memory system to heighten the retrieval of some item,
thereby creating an "error"
Application of this same principle can result in other judg-
ment errors, as when Tversky and Kahneman (1973) presented
a list o f famous women and not-so-famous men to a group o f
subjects. Although the list contained more men than women,
the subjects erroneously claimed that the list contained more
women. The notoriety o f the women heightened their availabil-
ity in memory and, thus, their retrievability The many judg-
ment errors that have been demonstrated in this manner are
certainly not adaptive if what we mean by "adaptive" implies
correspondence to reality (e.g, the actual number of men and
women in the list). However, I believe that such errors are a
consequence of the normal operation o f long-term memory:
Priming content with related items or by asking the person to
perform a cognitive activity will result in heightened retriev-
ability, which can result in nonveridical estimates of frequency
and probability
Again, such errors are a cost o f a memory system whose
principles o f association and retrieval produce benefits far in
excess o f these costs3 I very briefly enumerate several such
errors.
Explanation bias. Ross, Lepper, Strack, and Steinmetz
(1977) asked subjects to read a short scenario about a person
and then explain why this individual might have eventually
done some specified behavior, such as contributing money to
the Peace Corps or committing suicide. Subjects were assured
that the to-be-explained outcome was entirely hypothetical, be-
cause it was not known what actually happened to this individ-
ual. Participants subsequently rated the probability that the
person actually did each of several behaviors. Ross et al. (1977)
found that subjects assigned higher probabilities to the outcome
that they had explained. Making an option more available can
make the option seem more probable.
Hindsight bias. A judgment error closely related to availabil-
ity is the hindsight bias (Fischhoff, 1975). In hindsight we tend
to exaggerate the likelihood that we would have been able to
predict the event beforehand. Of course, the event that did oc-
cur and its possible causes are far more available than events
that never occurred. For example, after the election has taken
place, subjects say that they had assigned higher probability to
the winner's prospects than they actually had assigned before
the election occurred (Powell, 1988).
Ignoring P(D[It). Consider a farmer who wishes to deter-
mine if there is a relation between cloud seeding and rain. Avail-
able evidence includes the entries in a 2 x 2 table, the rows of
which are "seeding" and "no seeding" and the columns o f
which are "rain" and "no rainy Of course, the farmer needs to
examine the numbers of entries in each cell to arrive at a correct
conclusion. However, many investigators found that subjects
who are trying to determine the relation between cloud seeding
and rain often do not consider as relevant the evidence in the
"no-seeding" row (e.g., Arkes & Harkness, 1983). Similarly, stu-
dents are usually astonished to learn that to determine the rela-
tion between a symptom and a disease one needs to collect data
on the likelihood o f a symptom when the disease is not present.
Fischhoffand Beyth-Marom (1983) deemed to be a"meta-bias"
the general tendency to ignore data when the hypothesis is not
true or when the possible antecedent cause is not present.
Ratcliff and McKoon (1981) questioned the validity of spreading
activation theories of semantic memory. They did not question the
validity of the findings that have spawned such theories, however. I
believe the judgment errors I attribute to associative mechanisms
could be explained by either the spreading activation or compound cue
(Ratcliff& McKoon, 1981) theories.
2 Tversky and Kahneman (1974) also noted that heuristics such as
availability have benefits as well as costs.
 COSTS AND BENEFITS OF JUDGMENT ERRORS
The reason why this meta-bias exists is that the hypothesized
cause, but not its absence, primes relevant data. IfI believe that
disease D causes symptoms S, it seems obvious to ascertain the
status of S when D is present. The absence of D does not prime
S; as a result, many people do not believe that the status of S
needs to be ascertained in such cases.
Confirmation bias. I define confirmation bias as a selective
search, recollection, or assimilation of information in a way
that lends spurious support to a hypothesis under consider-
ation. Some authors put this term in quotation marks to denote
that it refers to a rather loosely related group of findings. (Fisch-
hoff & Beyth-Marom, 1983, even suggested abandoning the
term because of its imprecise referent.)
Confirmation bias was demonstrated by Chapman and
Chapman (1967) using the Draw-a-Person Test. This is a pro-
jective instrument in which a patient draws a picture of a per-
son, and a clinician then examines the picture for particular
cues that supposedly are associated with various types of psy-
chopathology. Because there was negligible evidence favorable
to the validity of this technique, the Chapmans thought that
associations between the features of the drawings and the pur-
ported diagnosis must be entirely illusory. To test this hypothe-
sis, drawings of people were randomly paired with personality
traits presumably characteristic o f the person who did the
drawings. Clinicians and undergraduates who viewed these
drawings perceived correlations between certain drawing fea-
tures and the personality traits of the person who drew the
figure. For example, subjects claimed that drawings containing
large eyes were frequently done by people who were said to be
suspicious. Drawings with muscular figures were frequently
said to be done by men who were concerned about their manli-
ness. The Chapmans concluded that because there was no real
correlation between these drawing features and personality
traits, subjects must be relying on preexisting associations in
perceiving this association.
To test this hypothesis, the Chapmans performed a follow-up
study. Undergraduates were asked to rate the strength of seman-
tic association between the body parts emphasized in the
various drawings and the personality traits said to be character-
istic of the drawers. In this follow-up study, the subjects rated
eyes as closely associated with Suspiciousness, for example. This
is precisely the illusory correlation detected by subjects in the
first study: They had incorrectly reported that suspiciousness
was characteristic of the persons who drew figures with large
eyes. This is an illustration of the confirmation bias because the
subjects assimilated the evidence in a biased way based on their
preconceived association between eyes and suspiciousness.
This study is quite similar to the one by Gilovich (1981) in that a
prior association results in an inappropriate consideration of
the evidence. In this case, the inappropriate consideration
serves to bolster the prior association.
Pseudodiagnosticity. Bayes's theorem may be expressed in
the following way:
P(HI)P(Di IH1)
P(HIID~) P(HI)P(DilH0 + P(H2)P(DilH2) '
where H and D signify the hypotheses and data, respectively,
and the subscript i indexes a set of data. Assume that the two
hypotheses are mutually exclusive and exhaustive.
489
Suppose subjects are given the choice of examining one pair
of data to determine P(H0. They may choose to learn P(D~IHO
and P(DI]H2); they may choose P(D2]H 0 and P(D2[H2); or they
may choose P(DdH0 and P(D2IH0. It may be seen by examin-
ing Bayes's theorem that to infer the probability of H~, the
choice of either of the first two pairs would be helpful. Choos-
ing the last pair will generally not provide diagnostic informa-
tion. However, the members of the last pair--P(DdH0 and
P(D2]H0---are both strongly cued when H~ is considered. This
may be why these two nondiagnostic data are selected by so
many subjects in a study by Doherty, Mynatt, Tweney, and
Schiavo (1979). These investigators termed this nonoptimal
judgment behavior pseudodiagnosticity.
Overconfidence. One of the most robust findings in the
judgment and decision-making literature is overconfidence
(Lichtenstein, Fischhoff, & Phillips, 1982). Koriat, Lichten-
stein, and Fischhoff(1980) suggested that a primary reason for
unwarranted confidence is that subjects can generate support-
ing reasons for their decisions much more readily than contra-
dictory ones. The supporting reasons are more strongly cued.
For example, suppose I am asked whether Oslo or Leningrad is
further north, and I answer "Oslo: Now I am asked to assign a
confidence level to my answer. To complete this task, I search
my semantic memory for the information that made Oslo seem
like the correct answer. Items pertaining to Oslo's nearby gla-
ciers and fjords are much more strongly cued than information
concerning Oslo's summer warmth. The evidence I am most
likely to retrieve thus is an unrepresentative sample of all avail-
able evidence, and my confidence is thereby inappropriately
inflated. Because of the increase in the confidence with which
an opinion is held, the process leading to overconfidence is
related to the confirmation bias.
Representativeness. To appreciate the nature of this heuris-
tic, it may be instructive first to consider the term overgeneral-
ization (Slobin, 1971). We admire the intelligence of the child
who generalizes the past tense verb ending "ed" to the unfamil-
iar verb "revel" thereby making "reveled." We think less highly
of the child who generalizes the same past tense ending to the
verb "do7 thereby making "doed: We call the latter behavior
overgeneralization, even though it seems to be a manifestation
of the same very fundamental principle we call generalization.
Of course, those of us who are aware of the existence of irregu-
lar verbs can be arrogant with children about what constitutes
overgeneralization of an inferential strategy outside its domain
of appropriate application. Overgeneralization is a judgment
error, but again I think this is a small cost of an otherwise
adaptive associationistic system.
The representativeness heuristic (Tversky & Kahneman,
1974) provides an example of such overgeneralization. This
heuristic refers to the fact that people often judge probabilities
on the basis of similarity, or representativeness. For example, in
judging whether Instance A belongs to Class B, people often
rely on the extent to which A seems representative of B. Of
course, the probability that A belongs to B can be influenced by
many factors that have no bearing on representativeness. For
example, basing one's decision solely on representativeness will
result in the underutilization of base rates (Kahneman &
Tversky, 1973), thereby resulting in errors.
490 HAL R. ARKES

Theories of category classification as old as that o f Hull VALUE

(1920) are based on the principle that decisions concerning the +

category membership o f an exemplar are based on the degree o f
similarity between the exemplar and the category. More recent
models, such as the feature-comparison model o f Smith, Sho-
ben, and Rips (1974), share this assumption. For example, to
the extent cardinal shares features with the category clergyman,
it is likely to be deemed a member o f that category. If cardinal
shares fewer features with the category bird than the category
clergyman, it is deemed likely to belong to the latter category
even though there are many more birds than clergymen in the
world. This feature-matching process ignores base rates o f the LOSSES GAINS
two categories; hence, it is prone to error.
Judgments o f similarity follow one of the most fundamental
principles of cognition: stimulus generalization. It is highly
adaptive that we associate items to other items with which they
are related. Even a task as basic as classic conditioning requires
this. The fact that cardinal is more closely associated with cler-
gyman than bird may bode very poorly for our consideration o f
base rates. However, I consider this cost to be an overgeneral-
ization o f a process that serves us very well in other contexts.
Thus, I suggest that the manifestation of the representativeness
heuristic is another example o f a cost o f an otherwise highly
adaptive associationistic system.
Figure 2. The value function of prospect theory (Kahneman &
Psychophysically Based Errors Tversky, 1979). (See text for discussion. From "Prospect Theory: An
Analysis of Decision Under Risk" by D. Kahneman and A. Tversky,
From psychophysical power functions (Stevens, 1957) to pros- 1979, Econometrica,47, p. 279. Copyright 1979 by Basil Blackwell Ltd.
pect theory's S-shaped curve (Kahneman & Tversky, 1979), Adapted by permission.)
from the original Weber-Fechner log function to economists'
law of diminishing returns, many theorists postulated an
asymptotic curve relating external stimuli (e.g., mass, cash, light course, extracting the optimal amount o f useful information is
intensity) and the psychological responses to those stimuli. Fig- highly adaptive even though diminished sensitivity at the ex-
ure 2 depicts the value function o f prospect theory (Kahneman tremes is a cost.
& Tversky, 1979), which represents one such nonlinear curve. Several judgment errors may be a manifestation o f this partic-
A system that translated physical intensity in a linear manner ular cost. I briefly enumerate several.
onto psychological response would impose an immense cost on Sunk cost effect. Economic decisions should be made based
any transduction system. Extreme stimuli, which occur rela- on the anticipated costs and benefits that will result from the
tively infrequently, would have to be coded with as great a level choice o f each o f the alternative courses o f action. Note that
of discriminability as the more frequent middle-range stimuli. future costs and benefits are relevant; prior (sunk) costs are not.
Any nonlinear system with an asymptote at the extreme end (or A judgment error occurs when sunk costs are used as a basis for
ends) would have the benefit o f eliminating the structures and decision making.
processes needed to discriminate small changes in rare events, The sunk cost effect is manifested in a willingness to con-
such as very intense sounds or extremely heavy weights. Of tinue spending after an investment o f time, effort, or money has
course, sacrificing discriminability at the ends o f the contin- already been made (Arkes & Blumer, 1985). Persons who have
uum has a cost. already invested substantial amounts and who have not yet real-
An experiment by Dinnerstein (1965) illustrates this point. ized compensatory returns are at Point B in Figure 2. Persons in
Dinnerstein presented subjects with a series o f weights and that situation are not very sensitive to further losses; a small
found that subjects' ability to discriminate was finest at the subsequent expenditure o f funds will therefore cause negligible
center of the range o f stimuli. Then a weight was introduced psychological disutility. Hence, such persons are willing to
that was either above or below all the others. This caused the "throw good money after bad" in a desperate attempt to recoup
region of maximal discriminability to either rise or drop de- their sunk cost, even though such behavior may be irrational. If
pending on whether the new weight was heavy or light. This a particular project is a poor idea, the fact that it has already
result occurred even though the new weight was not included in wasted a lot o f money does not make it a better idea. Yet the
the range of stimuli to be rated. This study demonstrates the sunk cost effect has been shown to be powerful (Arkes &
adaptation o f the nervous system to the available stimulus Blumer, 1985).
array, an adaptation that allows the perceiver to extract the opti- Psychophysics of spending. Once a person has decided to
mal amount of useful information from each situation. Of purchase a new ear, for example, he or she is located in the
 COSTS AND BENEFITS OF JUDGMENT ERRORS
asymptotic region o f a curve describing the psychophysics of
spending. Persons in this situation would be more willing to
pay $235 for a car radio compared with their willingness to buy
a radio for $235 if they had not purchased a car. We have good
discriminability (ie., the curve is steep) in the region o f a few
hundred dollars on either side of our current state. Once we are
several thousand dollars away from our current state, discrim-
inability drops (ie., the curve flattens), and we no longer object
to extravagant additional expenditures (Christensen, 1989).
Reflection effect. Tversky and Kalaneman (1981, p. 453 ) dem-
onstrated how framing the outcomes of the same gamble as
losses or as gains can lead to different decisions. They referred
to this phenomenon as the reflection effect, which is illustrated
in their following well-known example (p. 453):
Imagine that the U.S. is preparing for the outbreak of an unusual
Asian disease, which is expected to kill 600 people. Two alterna-
tive programs to combat the disease have been proposed. Assume
that the exact scientific estimates of the consequences of the pro-
grams are as follows:
If Program X is adopted, 200 people will be saved.
If Program Y is adopted, there is a one-third probability that 600
people will be saved and a two-thirds probability that no people
will be saved.
The benefit o f saving 200 lives is located at Point X in Figure
2. The benefit o f saving 600 lives is located at Point Y. Program
Y represents a relatively small gain in value over Program X.
Two hundred lives saved is so great a benefit that the additional
lives that might be saved under Program Y are too small an
additional benefit to warrant the risk of saving no one. Hence,
about three fourths of the subjects chose Program X.
Other subjects were asked to consider two other programs:
If Program B is adopted, 400 people will die.
If Program A is adopted, there is a one-third probability that no-
body will die and a two-thirds probabilitythat 600 people will die.
The loss of 400 lives is located at Point B in Figure 2. The loss
o f 600 lives is located at Point A. Because the loss of 400 lives is
so terrible, the loss of 200 additional lives represents only a
small additional loss in value. Hence, about three fourths o f the
subjects chose Program A. The potential extra loss in value by
choosing that program was more than offset by the chance of
saving everyone.
It is easy to see that Program X, which is generally endorsed,
is the same as Program B, which is generally shunned. If the
value function were strictly linear, this inconsistency would not
occur. By asking some subjects to consider the problem in
terms of lives gained, Tversky and Kahneman (1981) exploited
the small superiority of Y over X, a superiority which is not
sufficient to warrant additional risk. By asking other subjects to
consider the problem in terms o f lives lost, Tversky and Kahne-
man (1981) exploited the small inferiority o f A over B, an inferi-
ority small enough to warrant additional risk. The wording or
framing o f the problem directs subjects to different portions o f
the nonlinear curve.
Anchoring. The terms anchoring and anchoring and adjust-
ment were popularized in the judgment and decision-making
491
literature by Tversky and Kahneman (1974), although they were
discussed earlier (e.g., Slovic & Lichtenstein, 1971).
First, let us consider the psychophysical research pertaining
to "induction illusions" or "context effects" We know from
many experiments on adaptation level theory (Helson, 1964)
that when a medium-size circle is placed in a group o f much
larger ones, the medium one is perceived as small. This constel-
lation o f circles induces an adaptation level that is approxi-
mately at the mean value of the circles' areas, and the medium
circle has an area that is below this mean. When this same
medium-sized circle is placed in a context of much smaller
circles, it is perceived as large. Now its area is above the adapta-
tion level. The shift in the adaptation level is consistent with the
principle discussed previously by Dinnerstein (1965): It is best
to have the adaptation level change location to locate maximal
discriminability near the center o f the stimulus continuum.
Note that this adaptation is congruent with the relation be-
tween the physical and psychological dimensions depicted in
Figure 2. Point O is the current state, which is in the area of
maximal discriminability. The asymptotes are in areas of di-
minished discriminability.
Consider an analogous judgment experiment (Sutherland,
Dunn, & Boyd, 1983). Sixty-four hospitalized patients rated five
different health states using three different methods. In the first
method, subjects assigned values to these five health states on a
scale anchored by perfect health and death. In the second
method, perfect health was replaced on the high end of the scale
by a health state each rater had rated less desirable. Thus, the
high end o f the scale was no longer quite as high. In the third
method, death was replaced on the low end o f the scale by a
health state each rater had rated more desirable. Thus, the low
end o f the scale was no longer quite as low. Relative to the values
assigned to the various health states using the first method, the
values assigned to the very same health states using the second
method were lower, and those assigned using the third method
were higher. This study showed that a patient's rating o f possible
health states was strongly influenced by the context in which
such stimuli were considered. Such context-dependent effects
appear to induce inconsistent ratings just as the medium-sized
circle was rated differently depending on the size of the circles
with which it could be compared. However, this is a small cost
o f an otherwise beneficial adaptation designed to extract the
optimal amount of useful information out o f each situation.
Another group o f judgment studies is more closely related to
a context phenomenon demonstrated by Restle (1971). Subjects
were presented with a drawing like that in Figure 3. Restle
C
E E
Figure 3. Stimulus used in study by Restle (1971).
492 HAL R. ARKES
varied the length of the horizontal test line (H), the length of
the vertical center line (C), which crossed the test line, and the
length of the identical vertical ends lines (E). It was expected
that judgments of the length of H should decrease as C or E
increased. It was easy for Restle to determine the influence of E
and C on H by ascertaining the slope of the function relating E
to H and C to H.
Restle (1971) presented subjects with one of two possible sets
of instructions. One group was told, "Pay attention to the verti-
cal lines at the ends of the test line, and use them as a frame of
reference to help you in your judgments: These subjects were
also warned, "Try to disregard the center vertical line: Other
subjects were told just the opposite: They were to use the center
vertical line as a frame of reference and to ignore the end lines:
The result was that the line that subjects were told to attend to
was much more influential on the subjects' judgment oftbe test
stimulus than was the line they were told to ignore.
This study differs from the study involving the circles in that
instructions are used to direct the subject's attention to the refer-
ence point, which serves as the context for the ensuing judg-
ment. Flexibility of frames of reference, which introductory
psychology students first appreciate when they view a Necker
cube, is essential to recognize the same object in different con-
texts. However, this immense benefit has a cost, and many an-
choring and adjustment studies illustrate this cost.
In the most famous such study, Tversky and Kahneman
(1974) asked subjects to estimate the percentage of African
countries in the United Nations. Subjects spun a "rigged" spin-
ner, which landed on either 10% or 65% as a starting point.
Subjects were then were asked to adjust the starting number to
the level they thought was appropriate to answer the question
correctly. The median estimate for those who started with 10%
was 25%, whereas the median estimate for those who started
with 65% was 45%.
By directing the subject's attention to a starting point or an-
chor, Tversky and Kahneman (1974) did something analogous
to what Restle (1971) asked his subjects to do. When 10% is
presented as the anchor, a context is induced that contains low
numbers. Adjustments upward move toward the area of maxi-
mal discriminability in the central region of the spectrum. Be-
cause such adjustments in this region are perceived to be quite
significant, subjects often refrain from making them as large as
would be warranted. This results in the insufficient adjustment
observed by Tversky and Kahneman (1974). Of course, the op-
posite result occurs when the subject's attention is drawn to the
large anchor at the beginning of the experiment.
Many other studies illustrate the influence of the anchor in
analogous judgment situations (e.g., Northcraft & Neale, 1987).
It is true that different anchors and the subsequent insufficient
adjustment result in different final estimates given different
anchors. I suggest that this "irrationality" is a worthwhile cost
to achieve context-dependent judgment behavior.
Multiple Causes
To this point I have identified various biases, for example, the
hindsight bias, as belonging to one of the three categories of
judgment errors. However, some phenomena we term biases
may have more than one cause. Hence, it would not be appro-
priate to categorize the bias as belonging to a category o f judg-
ment error. Instead, the various causes o f the bias may be cate-
gorized according to the taxonomy presented previously.
Perhaps the best example of this situation is the conjunction
fallacy. Tversky and Kahneman (1983) suggested that the repre-
sentativeness heuristic is one basis for this fallacy. However,
they also pointed out in an earlier article (Tversky & Kahne-
man, 1974) that the anchoring and adjustment heuristic may
play a role in the manifestation of this fallacy in some instances
(e.g., Bar-Hillel, 1973). Tversky and Kahneman (1983, p. 312)
contended that speakers' conformity with Gricean (1975) con-
versational rules could hinder appreciation of the probabilistic
law relevant to the consideration of conjunctions. Worse yet,
Yates and Carlson (1986) suggested that individual subjects may
use multiple procedures in arriving at their answers on different
conjunction problems depending on the presence of various
factors. Thus, it would be a mistake to place the conjunction
fallacy itself into only one of the categories o f judgment errors.
It would be proper, however, to place each of the various causes
of the fallacy into one of the categories. Thus, the taxonomy
does not divide the judgment errors into mutually exclusive
categories. I suggest that the causes can be so divided. Whether
the categories are exhaustive with regard to the causes of judg-
ment errors remains to be determined.
To return to the example of the conjunction fallacy, anchor-
ing and adjustment is a psyehophysically based error. Represen-
tativeness is an association-based error as is the overgeneraliza-
tion of Gricean principles to probability estimates. If the envi-
ronment contains cues that foster one of these "incriminating"
behaviors, then the fallacy will occur.
Debiasing
Strategy-Based Errors
Bias may not be an appropriate term to use to describe subop-
timal behaviors in this category, and thus debiasingwould not
be an appropriate term to use to describe the adoption o f strate-
gies that result in higher accuracy levels. Suboptimal behaviors
occur in this category because the effort or cost of a more dili-
gent judgment performance is greater than the anticipated ben-
efit. The way to improve judgment within this category is to
raise the cost of using the suboptimal judgment strategy. Typi-
cally this results in the judge's utilization of the currently avail-
able data in a much more thorough way, an obviously superior
strategy.
Consider first the study by Harkness et al. (1985) alluded to
earlier and depicted in Figure 1. The investigators identified
four covariation strategies. The first, the Cell A strategy, con-
sists of noting how many times Tom liked a woman who had a
good sense of humor. The covariation between Tom's liking for
the woman and her sense o f humor is based on the number of
times he wanted to date such a person. The second strategy, A
minus B, consists of comparing Cells A and B. To the extent A
exceeds B, Tom is judged to like women with a sense of humor.
Note that these two strategies do not use Cells C and D. The
third strategy, sum of diagonals, compares the sum of A and D
 COSTS AND BENEFITS OF JUDGMENT ERRORS
with that of B and C. To the extent the former sum exceeds the
latter, Tom is judged to like women with a sense o f humor. The
final strategy, conditional probability, is the normative assess-
ment o f covariation. These final two strategies use the data in
all four ceils. Harkness et al. found that 6 o f the 11 women who
were given information about Tom but who would not be dat-
ing him used one o f the two primitive strategies. None o f the 11
women who thought they would be going out with Tom used
these simple strategies; they all used one o f the two sophisti-
cated covariation estimation strategies. If a subject in a low-
stakes judgment environment were using only a subset o f the
available data, it would be obvious how to improve one's judg-
ment should the stakes increase: Use more data.
An analogous finding is exemplified in a study by Petty and
Cacioppo (1984). Undergraduates were exposed to three or nine
arguments that were all o f either high or low quality. The argu-
ments related to an issue that would be o f importance to a
group of undergraduates: The institution o f a new policy in one
year under which all students had to pass a comprehensive
exam in their major field to graduate from the university. Need-
less to say, this was the "high-involvement" group. The "low-in-
volvement" subjects also evaluated either three or nine strong or
weak arguments, but the issue concerned the adoption o f this
new policy at a time long after this group o f students would
graduate. Petty and Cacioppo found that the low-involvement
subjects were more persuaded by nine arguments than by three
arguments. The strength o f the argument was not a significant
factor. For the high-involvement subjects, the strength o f the
arguments rather than their mere number was significant. If
subjects are not concerned with a proposition, merely counting
the arguments in support o f it might be sufficient. If the stakes
are raised, an obvious strategy is available the benefits o f which
are substantial: Consider the merits of the arguments.
In both the Harkness et al. (1985) and the Petty and Cacioppo
(1984) studies, the presence o f higher stakes resulted in less
superficial treatment o f the data available as the basis o f a deci-
sion. Tetlock and K i m (1987) found that the same end could be
accomplished through slightly different means. All subjects
were presented with the responses of an actual test taker to the
first 16 items of a personality test. Based on these responses,
subjects were first asked to write a brief personality sketch o f
the test taker. Then subjects were then asked to predict how the
test taker would answer 16 new items. One group o f subjects
was told beforehand that they would be interviewed by the
experimenter to learn how the subjects went about making
their predictions. These accountability subjects wrote more
complex personality sketches, were more accurate in their pre-
dictions o f how the test takers would answer the next 16 items,
and expressed less overconfidence in their predictions. Know-
ing that they would be held accountable for their predictions
raised the stakes for the subjects, which caused them to interact
with the stimulus materials in a less superficial way.
Cursory interactions with currently available data cause strat-
egy-based errors, and incentive promotes the adoption of a
more thorough strategy.
Association-Based Errors
The influence o f incentives in eliminating association-based
errors is negligible, as illustrated in an experiment by Fischhoff,
493
Slovic, and Lichtenstein (1977). In this study, subjects assigned
confidence levels to their answers to two-option questions, such
as"Aden was occupied in 1839 by the (a) British or (b) French7 If
the analysis o f this situation by Koriat et al. 0980) is correct,
subjects search for reasons to support their answer. This search
instills a high (and inappropriate) level o f confidence. Fischhoff
et al. (1977, Experiment 4) wanted to find out how intransigent
this overconfidence was. Subjects were asked to wager actual
money based on the confidence levels they had assigned to
their answers. About 93% o f the subjects agreed to wager in a
game that would have been biased in their favor if their confi-
dence levels had been appropriate for their level o f accuracy. I
assume that the prospect o f winning or losing substantial
amounts o f cash based on their stated confidence levels would
cause subjects to scrutinize the basis o f these stated levels. This
additional, highly motivated scrutiny apparently led the vast
majority of subjects to conclude that their stated confidence
levels were justified. Nevertheless, 36 o f the 39 subjects would
have lost money in this game, because their high levels o f confi-
dence were not justified.
Incentives are not effective in debiasing association-based
errors because motivated subjects will merely perform the sub-
optimal behavior with more enthusiasm. An even more assidu-
ous search for confirmatory evidence will not lower one's over-
confidence to an appropriate confidence level.~
Fischhoff(1975) and others tried a direct approach to debias
the hindsight effect: Tell the subjects about the bias and then
warn them not to succumb to it. If the mechanism responsible
for the hindsight bias is the memorial priming o f an outcome by
its actual occurrence, then exhortations to prevent this priming
will generally not be effective because the priming o f associa-
tions between related items probably occurs automatically
(Neely, in press; Ratcliff & McKoon, 1981). That is, priming is
unconscious and occurs with negligible capacity usage (Posner
& Snyder, 1975). It would be difficult for subjects to abort a
cognitive process that occurs outside o f their awareness. ~Please
prevent associated items from influencing your thinking"
would be a curious entreaty unlikely to accomplish much de-
biasing.
There is a long history o f research in cognitive psychology
that demonstrates that the occurrence o f automatic processes
can be maladaptive. The most commonly cited example is the
Stroop effect (Stroop, 1935). Subjects are shown words and are
asked to name as quickly as possible the color o f the ink in
which the word is printed. When the word itself is the name o f
some color, such as red, and the ink is a different color, subjects
experience difficulty in suppressing the tendency to announce
red rather than the color o f the ink. The activation o f a word in
semantic memory is "too automatic" for the subject to perform
the Stroop task with facility.
In an analogous way, association-based judgment errors are a
3 Thaler (1986), among others, also noted that increasing the incen-
tive for rational behavior does not always result in heightened rational-
ity. This presents a problem for economists who hope that the irration-
alities documented by psychologists in questionnaire studies will dis-
appear when financial incentives for rational behavior are introduced.
494 HAL R. ARKES
small cost of an otherwise adaptive association-based semantic
memory system. These errors occur when items semantically
related to the judgment influence it even when their influence
is not conducive to increased accuracy. To diminish an associa-
tion-based judgment error, neither the introduction of incen-
tives nor entreaties to perform well will necessarily cause sub-
jects to shift to a new judgment behavior. Instead, it will be
more helpful to instruct the subjects in the use of a behavior
that will add or alter associations.
Instructions to perform a debiasing behavior. On the basis of
earlier research by Slovic and Fischhoff(1977) and by Koriat et
al. (1980), Arkes, Faust, Guilmette, and Hart (1988) presented
neuropsychologists with a small case history and then asked
them to state the probability that each of three possible diag-
noses was correct. The estimates of these subjects comprised
the foresight estimates. Other neuropsychologists were told that
one of the diagnoses was correct and that they should estimate
the probability they would have assigned to the three diagnoses
if they did not know which one correct. These hindsight sub-
jects exhibited a bias by assigning a higher probability level to
the "correct" diagnosis than did the foresight subjects. How-
ever, hindsight subjects who had to state one reason supporting
each of the diagnoses before making their probability estimates
manifested no hindsight bias.
The behavior of considering evidence supportive of an out-
come that did not occur is unlikely to he performed by
subjects--whatever their motivation--unless they are asked to
do so. The consequence of performing this behavior is lowering
the inappropriate confidence one has in the accuracy of one's
responses and reducing the magnitude of the hindsight effect.
Koriat et al. (1980) found that this technique was effective in
reducing the overconfidence people generally have in their an-
swers to general knowledge questions, and Hoch (1985) found
the same technique was able to lower overconfidence in fore-
casts made by business students.
Note that this"consider the opposite" strategy (Lord, Lepper,
& Preston, 1984) attempts to debias by priming stimuli other
than the ones that would normally be accessed. Once this prim-
ing occurs, new causal skids are greased. The consequent influ-
ence of these new factors will occur according to the same mech-
anisms that led to the bias (e.g., hindsight, confirmation, over-
confidence) in the first place. If the occurring event cued its
own causal chains, then considering the nonoccurring event
ought to accomplish the analogous result, thereby reducing the
bias.
Another type of debiasing has been effective against overcon-
fidence, a bias that I have postulated is a consequence of cuing
mainly supportive evidence. Murphy and Winkler (1974) found
that weather forecasters have outstanding accuracy-confidence
calibration. For example, there is rain on 90% of the days on
which meteorologists say there is a 90% chance of rain. How-
ever, Wagenaar and Keren 0986) showed that meteorologists
were very overconfident in their answers to general knowledge
questions. This suggests that these professionals have not
learned some general dehiasing strategy like "consider the op-
posite" which they can then apply to domains outside their area
of expertise. Instead, the absence of overconfidence for this and
a very few other select groups of professionals in their area of
expertise is due to the fact that they get rapid feedback on a very
large number of predictions the confidence level of which is
carefully recorded. Of course, daily feedback on the appropri-
ateness of one's confidence is a dehiasing technique almost
never available to most people.
Cuing a debiasing behavior. Rather than instructing people
in a different judgment behavior, it is possible to merely cue
such a behavior. An example is provided by the research pro-
gram of Nisbett, Krantz, Jepson, and Kunda (1983), who were
interested in discovering independent variables that would fos-
ter the use of an appropriate statistical inference technique by
college students. Tversky and Kahneman (1974) showed that
many subjects did not use such inference techniques in many
instances; therefore, the subjects' judgments were incorrect.
Hence, the imposition on subjects of any of the effective inde-
pendent variables discovered by Nisbett et al. for these tasks
would constitute debiasing. For example, subjects in their third
study were presented with the story of David, a high school
senior who had to choose between a small liberal arts college
and an Ivy League university. Several of David's friends who
were attending one of the two schools provided information
that seemed to favor quite strongly the liberal arts college. How-
ever, a visit by David to each school provided him with contrary
information. Should David rely on the advice of his many
friends (a large sample) or on his own 1-day impressions of each
school (a very small sample)? Other subjects were given the
same scenario with the addition of a paragraph that made them
"explicitly aware of the role of chance in determining the im-
pression one may get from a small sample" (Nisbett et al., 1983,
p. 353). Namely, David drew up a list for each school of the
classes and activities that might interest him during his visit
there, and then he blindly dropped a pencil on the list, choosing
to do those things on the list where the pencil point landed.
These authors found that if the chance factors that influenced
David's personal evidence base were made salient in this way,
subjects would he more likely to answer questions about the
scenario in a probabilistic manner (i.e, rely on the large sample
provided by many friends) than if the chance factors were not
made salient. Such hints, rather than blatant instruction, can
provide routes to a debiasing behavior in some problems.
Confidence as a second-order judgment. If I estimate the
potential of college football players, the proportion of men in a
list of people, or the merit of program X in combating an Asian
disease, I would be performing a first-order judgment task. I f I
am called on to express my confidence in any of those judg-
ments, then I am performing a second-order judgment task. By
stating my confidence, I am rendering a judgment about my
first-order judgment.
Debiasing techniques aimed at the first-order judgment can
also have salutary effects on overconfidence. For example, Tet-
lock and Kim (1987) found that subjects who knew that they
would be held accountable for their predictions and thus were
in a high-stakes situation wrote complex personality sketches of
the person whose test they were reviewing. They also made
more accurate predictions concerning these test takers than did
subjects in a low-stakes situation. This study was used to illus-
trate the fact that incentives can improve strategy-based judg-
ments. However, Tetlock and Kim found that the accountabil-
 COSTS AND BENEFITS OF JUDGMENT ERRORS
ity group also was less overconfident in their judgments than
the control group. I hypothesize that this result was because
accountability subjects more thoroughly studied all available
evidence compared with the control group. As a consequence,
the usual finding--overconfidence--was ameliorated. Subjects
typically have to be instructed to consider evidence that is con-
trary to their decision to bring their confidence down to reason-
able levels (Koriat et al., 1980). However, because confidence is
a second-order judgment, attempts at improving the first-order
judgment may also have a beneficial effect in debiasing over-
confidence. (See also Arkes, Christensen, Lai, & Blumer, 1987,
Experiment 2).
Psychophysically Based Errors
Techniques effective in debiasing psychophysicaily based
errors are much different than those effective in debiasing asso-
ciation-based errors. However, we must first consider what con-
stitutes bias.
Suppose that I am in line at the betting window before the
last race of the day at a race track. The man in front of me
bemoans his terrible luck on the prior 11 races and decides to
put all his remaining funds ($50) on a long shot on the last race.
Because he lost all I 1 of the prior races, we assume that he was
at point B in Figure 2. The loss of $50 would not represent a
significant decrease in utility. The gain of several thousand
would represent an enormous increase. Calculations based on
the curve in Figure 2 might indicate that his behavior was"ratio-
nal"; he was maximizing expected utility. If the upper portion
of Figure 2 described the relation between objective light inten-
sity and his subjective brightness judgments, it would not have
been sensible for me to say, "Sir, I respectfully point out that
your judgments do not increase in a linear fashion with objec-
tive intensity. Therefore, your judgment is biased, and you
might do well to correct your responses: For the same reason, it
would not have been sensible for me to point out that his betting
behavior was biased. Given the psychophysics of his situation,
his behavior followed in an unbiased manner. Because there
was no bias, there was no warrant to debias.
Kahneman and Tversky (1984) pointed out that when sub-
jects are presented with their inconsistent answers on the two
versions of the Asian disease problem, many do not want to
resolve the inconsistency by changing one of their answers.
They can be made to realize that the inconsistency is present.
However, they apparently do not consider their answers to be
nonnormative or "biasedY This suggests how difficult debias-
ing may be on psychophysically based errors.
Suppose a person's own psychophysical function is not used
as a basis for making a decision. Instead, a benevolent other
may wish to impose a "normative" framework, thereby chang-
ing the original person's response. An example might be an
accountant who, through his or her professional training, real-
izes that the manifestation of the sunk cost effect will have
adverse effects on the economic well-being of everyone in a
company. If he or she wants to debias the sunk cost effect, what
avenues are possible?
Incentives, which are effective in debiasing strategy-based
errors, are ineffective in debiasing psychophysically based
495
errors. Sunk cost reasoning has been used to justify continued
funding of multibillion dollar "lemons" (Arkes & Blumer,
1985). In addition, it has been used to justify continued spend-
ing on the exceedingly expensive B-2 bomber(Staff, 1989, p. 8).
If saving billions of dollars is not a sufficient monetary incen-
tive, then we may conclude that the sunk cost effect is not partic-
ularly vulnerable to this type of debiasing.
It is not clear how changing the judgment behavior to add
associations, a technique effective in debiasing association-
based errors, would even be applied here. I am unaware of any
such attempts.
To debias psychophysically based errors, at least four tech-
niques may be effective, however.
First, because the curve relating objective gains and losses to
subjective gains and losses cannot be changed, debiasing may
occur when new gains or losses are added to those currently
under consideration. This will change the location of the possi-
ble outcomes on the curve. For example, Northcrafi and Neale
(1986) asked subjects to consider spending more money on a
project that appeared to be doomed to failure. Subjects in the
control group tended to continue to spend, thereby manifesting
the sunk cost effect. Other subjects were informed of the pres-
ence of opportunity costs. This term refers to the fact that money
spent on the doomed project is unavailable for use on much
more promising ventures. These superior investments repre-
sent lost opportunities if the funds are spent elsewhere. Reveal-
ing to subjects the presence of this huge additional cost made
the choice of the sunk cost option much less attractive, and
fewer subjects succumbed to the sunk cost effect. This situation
can be understood by referring again to Figure 2. Consider the
subjects who had not been made aware of the opportunity cost
of a further small investment in a hopeless cause. Should the
investment prove to be unsuccessful, the location of the sub-
jeers would shift from point B (their current position) to point
A, a small loss in utility. However, those subjects who had been
made aware of the opportunity cost of continued investment in
a lost cause would realize that such behavior would actually
result in a shift from point B to point Q. This represents a larger
loss of psychological utility. Presenting subjects with informa-
tion concerning opportunity costs decreased subjects' willing-
ness to continue investing.
A second way to modify psychophysical judgment behaviors
is to change the concatenation of related items. For example,
Thaler (1985) asked subjects to decide whether Mr. A or Mr. B
was happier. Mr. A won two lotteries, one for $50 and one for
$25. Mr. B won a single lottery of $75. The large majority of
subjects thought that Mr. A would be happier. Mr. A would
receive two separate winnings, and because of the concavity of
the value function in the region of gains, the sum of the values
of the two winnings would be greater than value of their sum,
that is v(25) + v(50) > v(25 + 50). Thaler (1985) pointed out that
late-night mail-order advertisements take advantage of this prin-
ciple by tossing in a tool set, knives, and other separable items to
make the gain look particularly large. Adding more of the same
product would merely push the potential buyer along the
asymptote where value increases quite slowly. Thus, segregating
versus integrating gains can cause changes in one's willingness
to make purchases.
496 HAL R. ARKES
A third technique is to change one's reference point. When
someone is 100,000 calories in arrears on a diet, one is at point
A. Efforts to move to the right and upward on the scale will not
result in much improvement in the immediate future. However,
if one begins the diet anew, then one is transposed to point O.
Here improvement is easier to achieve thanks to the shape of
the curve in the region of the origin. Maxims like "Today is the
first day of the rest of your life" use this principle. (A related
economic analysis can be found in Loewenstein, 1988).
Fourth, one can reframe losses as gains (or gains as losses) as
was accomplished by Tversky and Kahneman (1981) in their
Asian disease example. (Also see McNeil, Pauker, Sox, &
Tversky, 1982.)
Note that these techniques do nothing to alter the shape of
the psychophysical curve. Psychophysically based judgment
errors occur because the relation between external stimuli and
psychological responses to those stimuli is nonlinear. Because
the shape of the curve depicting this relation is a given, debias-
ing consists of changing either the location of the options or the
location of one's reference point on the curve.
Training
At least one type of debiasing lies outside the categorization
scheme just presented. Its success is not due to its ability to
counteract the cognitive behaviors characteristic of strategy-
based, association-based, or psychophysically based judgment
errors.
This type ofdebiasing is professional training. When examin-
ing the financial state of a company, an accountant is unlikely to
fall prey to the sunk cost effect. Standard accounting proce-
dures simply allow no place for the consideration of sunk costs.
From a psychological perspective, this is not a very interesting
instance of debiasing. However, it is instructive that quite spe-
cific professional training may be necessary for debiasing to be
successful. Arkes and Blumer (1985) showed that taking a
course or two in general economics did not inoculate students
against the sunk cost effect.
Another example of this same type of debiasing is more gen-
eral and therefore much more interesting. Lehman, Lempert,
and Nisbett (1988) showed that graduate training can influence
subjects' statistical reasoning. For example, Lehman et al.
showed that the importance of control groups is more likely to
be apprehended by advanced psychology graduate students
than by advanced chemistry students. The superiority of the
psychology students may represent a result similar to the pre-
sumed superiority of the accountants in resisting the sunk cost
effect. Namely, professional training in the techniques of psy-
chological research heightened their awareness of the impor-
tance of control groups.
Instruction in standard accounting procedures or scientific
methodology represent examples of providing people with
tools designed to reach a normatively appropriate answer. Ed-
wards and yon Winterfeldt (1986) pointed out that "if the prob-
lem is important and the tools are available people will use
them and thus get right answers" (p. 679). Indeed, training in-
volves giving certain (usually self-selected) people precisely
those tools needed to arrive at correct answers. The decision to
be trained professionallyor to seek someone who isso trained is
a meta-strategy that will ameliorate some judgment errors.
Conclusion
In his excellent review of the debiasing literature,Fiscb_hoff
0982, p. 444) suggested that clarifyingand exploiting the cog-
nitiveprocesses underlying dcbiasing are major theoreticaland
practical tasks. The debiasing literature currently contains a
desultory catalog of techniques that work, techniques that do
not work, and techniques that work on some tasks but not
others. The purpose of this articlewas to divide judgment be-
haviors into three broad categoriesbased on functionalistcrite-
ria, namely the bases for their costs and benefits. With this
taxonomy, itisthen possible to hypothesize which variablesare
likely to be effectivein dcbiasing judgment errors within each
category.
Strategy-based errors occur when the cost of extra effort out-
weighs the potential benefit of extra accuracy. Given this prem-
ise, debiasing should occur when the benefits of accurate judg-
ment are increased.
Association-based errors are costs of otherwise highly adap-
tive system of associations within semantic memory. Errors oc-
cur when semantically related but judgmentally harmful associ-
ations are brought to bear on the task. Debiasing requires the
performance of a behavior that will activate different associa-
tions.
Psychophysically based errors are due to the nonlinear rela-
tion between external stimuli and the subjective responses to
those stimuli. Debiasing therefore requires changing the loca-
tion of one's position on the curve depicting this relation or the
position of one or more of the options.
Twenty years of extremely creative research have docu-
mented the presence of many judgment shortcomings. It is
hoped that this taxonomy will help in the search for techniques
with which we will be able to debias such errors.
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Received December 6, 1989
Revision received July 10, 1990
Accepted February 12, 1991 •