Abstract:

Probability weighting bias refers to the deviation between the perceived likelihood and the objective likelihood of an event, which affects investment, insurance, doctor-patient communications, etc. The non-compensatory strategy in which people give more weight to “outcomes” than “probabilities”, and the emotional fluctuation induced by the reference point cause probability weighting bias; changing the description of “probabilities”, emotional experience of “outcomes”, reference point of “gains and losses”, and psychological distance from risk, can adjust such bias and optimize decision-making. Future studies need to further explore the issues, such as its application situations, mechanism correlations, and the identification of probability weighting bias.

Key words: probability weighting bias, outcome dimension, probability dimension, reference point, emotional experience, optimizing strategy