Suppose that you are evaluating two delivery companies. Your investigation
shows that Company B has a better on-time rate for small packages and also
for large packages. Despite Company B's performance, however, Company A has
a better overall ontime rate. This situation exemplifies Simpson's Paradox
, in which the judged relationship between two variables (e,g,, company and
performance) differs depending on whether that relationship is viewed with
in subcategories of a third variable (e,g,, package size) or in the aggrega
te. A normative analysis is presented arguing that the reasonableness of us
ing the third variable depends upon the sample size as well as the separati
on between and variability within categories. To test subjects' abilities t
o behave appropriately in Simpson's Paradox situations, we examined respons
es to variations in these factors in five studies. Results showed that subj
ects had little or no sensitivity to differing stimulus set sizes. Also, su
bjects were sensitive to relationship strength and the variability within a
nd between groups, and in nonnormative ways. Subjects' judgment behavior is
related to a broader perspective concerning selection among multiple avail
able levels of analysis based on a consideration of argument strength. (C)
2000 Academic Press.