Judging a Part by the Size of Its Whole: The Category Size Bias in Probability Judgments

Whereas prior research has found that consumers' probability judgments are sensitive to the number of categories into which a set of possible outcomes is grouped, this article demonstrates that categorization can also bias predictions when the number of categories is fixed. Specifically, five experiments document a category size bias in which consumers perceive an outcome as more likely to occur when it is categorized with many rather than few alternative possibilities, even when the grouping criterion is irrelevant and the objective probability of each outcome is identical. For example, participants in one study irrationally predicted being more likely to win a lottery if their ticket color matched many (vs. few) of the other gamblers' tickets.and wagered nearly 25% more as a result. These findings suggest that consumers' perceptions of risk and probability are influenced not only by the number of categories into which possible outcomes are classified but also by category size.