Proceedings of the Annual Meeting of the Cognitive Science Society

Contemporary models of subjective probability distortions assume that distortions arise during probability encoding. However, such assumptions are inconsistent with the ability of humans to retrieve probabilities veridically in some elicitation formats. We present a sampling-based model of probability judgment for risky prospects that assumes that probability distortions occur because people read out probability judgments as biased averages from working memory contents. Simulations demonstrate that this model shows the classic inverse-S shaped distortion of probability judgments using only retrieval-stage assumptions. The model further predicts that observers with greater working memory capacity would show larger probability distortions on average, which should lead to a particular fourfold pattern of risk preference as a function of working memory capacity. Using cognitive ability measurements as a proxy for working memory capacity, we conducted an experiment with human participants and found results consistent with the model's predictions as well as previous empirical studies. Our results support a role for sampling during assessment of risky prospects, which in turn explains differences in probability distortions seen across different elicitation methods.