Leading theories of risky choice predict that decision makersare sensitive to the variability of payoff distributions. Yet, lit-tle is known about how experience affects perceived variabil-ity. Existing empirical research on risky choice provides onlyinconclusive evidence about this issue because choices are notonly affected by perceived variability but also perceived valueand (unobserved) risk preferences. In re-analyses of experi-mental data and survey data from two nationally representativepanels, we show that perceived variability strongly depends onsample variability. In a new experiment, we also demonstratethat perceived variability systematically depends on samplesize, a result consistent with the predictions of a recent the-oretical paper by the authors (Konovalova & Le Mens, 2017).

People often perceive their in-groups as more heterogeneousthan their out-groups. We propose an information samplingexplanation for this in-group heterogeneity effect. We analyzea model in which an agent forms beliefs and attitudes aboutsocial groups from her experience. Consistent with robust evi-dence from the social sciences, we assume that people are morelikely to interact again with in-group members than with out-group members. This implies that people obtain larger sam-ples of information about in-groups than about out-groups. Be-cause estimators of variability tend to be right-skewed, but lessso when sample size is large, sampled in-group variability willtend to be higher than sampled out-group variability. This im-plies that even agents that process information correctly – evenif they are naive intuitive statisticians – will be subject to thein-group heterogeneity effect. Our sampling mechanism com-plements existing explanations that rely on how informationabout in-group and out-group members is processed.