Probability learning, event-splitting effects and the economic theory of choice

This paper reports an experiment which investigates a possible cognitive an tecedent of event-splitting effects (ESEs) experimentally observed by Starm er and Sugden (1993) and Humphrey (1995) - the learning of absolute frequen cy of event category impacting on the learning of probability of event cate gory - and reveals some evidence that it is responsible for observed ESEs. It is also suggested and empirically substantiated that stripped-down prosp ect theory will accurately predict ESEs in some decision making tasks, but will not perform well in others. This contention, it is argued, is indicati ve of fundamental descriptive shortcomings in the economic conception of ch oice under uncertainty and may entail implications beyond the direct concer ns of this paper.