Probable Cause: The Influence of Prior Probabilities on Forecasts and Perceptions of Magnitude

Abstract Consumers’ judgments of the magnitude of benefit that a product provides increase their likelihood of purchasing it, and their judgments of the magnitude of harm that accrues from purchasing a product decrease their likelihood of purchasing it. When assessing the magnitude of a product’s potential outcome, consumers often encounter information about its probability of occurring. Ten studies demonstrate that this information biases consumers’ product decisions. Consumers both expect and perceive larger-probability outcomes to be larger in magnitude—even when they receive identical and objective information about the outcome’s actual magnitude. This bias emerges because people believe that larger probabilities emanate from more powerful causal antecedents, and in turn expect more powerful antecedents to produce larger outcomes. Moreover, this bias shapes consumers’ product decisions. Of course, it is rational for people to prefer products that promise high-probability benefits and to avoid products that produce high-probability harms. But consumers irrationally overweight this probability information because it distorts their judgments of the magnitude of products’ benefits and harms, and this distortion biases their purchase decisions.