Illusion of prediction possibility of random outcomes: experimental results

Maria Forlicz (), Tomasz Rólczyński () and Biagio Simonetti ()
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Maria Forlicz: Wroclaw University of Economics and Business
Tomasz Rólczyński: WSB University in Wroclaw
Biagio Simonetti: University of Sannio

Quality & Quantity: International Journal of Methodology, 2023, vol. 57, issue 3, No 14, 495 pages

Abstract: Abstract The study shows the erroneous perception of probability biased by illusion of prediction possibility. Even if the probability of winning is known, people make different decisions concerning joining a game depending on who is fulfilling the task of predicting the result of a random game. The aim of this paper is to test whether people think that it is possible to predict outcomes of a random event and if so, whether they believe that it is possible to achieve better results when applying positive stimulation. By conducting an experimental study with real payoffs (although not monetary), authors of the research tested the hypothesis saying that people who decide to participate in a risky game are more willing to do so if its outcome depends on the decision of somebody whose gain is connected to the outcome of the game than when it is made by somebody who neither gains nor losses anything by playing the game. Over 700 hundred students were asked to participate in a game in which they could gain or lose points needed to pass a course. The task involved guessing the outcomes of two coin tosses. The scenarios differed in terms of the risk level, the person who was guessing and the remuneration. More people were willing to take part in the game according to the scenario where participants could guess outcomes themselves rather than when someone else was guessing. Also, in the game with a higher risk level, more people were willing to play in the scenario in which someone else made a guess but was rewarded for an accurate guess rather than in the scenario where someone else who made a guess was not rewarded for it. The findings of the study allow for a conclusion that participants believed that someone incentivized was able to guess better, i.e. reduced the risk of losing than a person who was not incentivized.

Keywords: Decision making under risk; Illusion of control; Experiment; Gambling; Prediction (search for similar items in EconPapers)
JEL-codes: C91 D91 G41 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11135-022-01433-6

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