Abstract
The rational status of the Bayesian calculus for revising likelihoods is compromised by the common but still unfamiliar phenomenon of information distortion. This bias is the distortion in the evaluation of a new datum toward favoring the currently preferred option in a decision or judgment. While the Bayesian calculus requires the independent combination of the prior probability and a new datum, information distortion invalidates such independence (because the prior influences the datum). Although widespread, information distortion has not generally been recognized. First, individuals are not aware when they themselves commit this bias. In addition, it is often hidden in more obvious suboptimal phenomena. Finally, the Bayesian calculus is usually explained only with undistortable data like colored balls drawn randomly. Partly because information distortion is unrecognized by the individuals exhibiting it, no way has been devised for eliminating it. Partial reduction is possible in some situations such as presenting all data simultaneously rather than sequentially with revision after each datum. The potential dangers of information distortion are illustrated for three professional revision tasks: forecasting, predicting consumer choices from internet data, and statistical inference from experimental results. The optimality of the Bayesian calculus competes with people's natural desire that their belief systems remain coherent in the face of new data. Information distortion provides this coherence by biasing those data toward greater agreement with the currently preferred position—but at the cost of Bayesian optimality.
Highlights
The rational status of the Bayesian calculus for revising likelihoods is compromised by the common but still unfamiliar phenomenon of information distortion
While the Bayesian calculus requires the independent combination of the prior probability and a new datum, information distortion invalidates such independence
Because information distortion is unrecognized by the individuals exhibiting it, no way has been devised for eliminating it
Summary
Reviews by DeKay (2015) and by Russo (2015) report the near universal presence of ID in decisions where the relevant information is acquired over time. ID is a systematic function of the prior commitment to the tentatively preferred course of action, as indexed by the prior probability. The new information/datum is so anti-leader that the posterior probability reflects a reversal of the leading option. This might mean switching the tentative preference from investing to not investing. When such a preference reversal occurs, ID biases the evaluation of new information toward the new leading option, such as toward not investing. When such a preference reversal occurs, ID biases the evaluation of new information toward the new leading option, such as toward not investing. (see, Carlson et al, 2013, for residual traces of an initial preference)
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