Reference : The ratio bias phenomenon: fact or artifact?
Scientific journals : Article
Business & economic sciences : Microeconomics
The ratio bias phenomenon: fact or artifact?
Lefebvre, Mathieu mailto [Université de Liège - ULiège > HEC-Ecole de gestion : UER > Economie politique et finances publiques >]
Vieder, Ferdinand [ > > ]
Villeval, MArie-Claire [ > > ]
Theory and Decision
[en] Ratio bias ; Error rates ; Financial incentives ; Experiment
[en] The ratio bias—according to which individuals prefer to bet on probabilities
expressed as a ratio of large numbers to normatively equivalent or superior
probabilities expressed as a ratio of small numbers—has recently gained momentum,
with researchers especially in health economics emphasizing the policy importance
of the phenomenon. Although the bias has been replicated several times, some doubts
remain about its economic significance. Our two experiments show that the bias disappears
once order effects are excluded, and once salient and dominant incentives are
provided. This holds true for both choice and valuation tasks. Also, adding context
to the decision problem does not alter this finding. No ratio bias could be found in between-subject tests either, which leads us to the conclusion that the policy relevance
of the phenomenon is doubtful at best.

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