Banking on a Bad Bet

Probability matching is the tendency to match choice probabilities to outcome probabilities in a binary prediction task. This tendency is a long-standing puzzle in the study of decision making under risk and uncertainty, because always predicting the more probable outcome across a series of trials (maximizing) would yield greater predictive accuracy and payoffs. In three experiments, we tied the predominance of probability matching over maximizing to a generally adaptive cognitive operation that generates expectations regarding the aggregate outcomes of an upcoming sequence of events. Under conditions designed to diminish the generation or perceived applicability of such expectations, we found that the frequency of probability-matching behavior dropped substantially and maximizing became the norm.