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Cognitive Biases

Hypothesis Generation

People tend to overestimate the probability of specified hypotheses because they fail to consider alternative hypotheses (the 'residual'). Explicitly generating or being provided with alternative hypotheses can correct this bias by unpacking the residual, leading to more accurate probability judgments.

THE IDEA

Hypothesis Generation

Many judgments require people to generate hypotheses as well as assess their likelihood. In this account, the generation of alternative hypotheses entails some unpacking of the residual hypothesis and, thus, is expected to increase its support relative to the focal hypothesis. In the absence of explicit instructions to generate alternative hypotheses, people are less likely to unpack the residual hypothesis and thus tend to overestimate specified hypotheses relative to those left unspecified.

This implication has been confirmed by Gettys and his colleagues (Gettys, Mehle, & Fisher, 1986; Mehle et al., 1981), who have found that, in comparison with veridical values, people generally tend to overestimate the probability of specified hypotheses presented to them for evaluation. Indeed, overconfidence that one’s judgment is correct (e.g., Lichtenstein, Fischhoff, & Phillips, 1982) may sometimes arise because the focal hypothesis is specified, whereas its alternatives often are not. Mehle et al. (1981) used two manipulations to encourage unpacking of the residual hypothesis: One group of subjects was provided with exemplar members of the residual, and another was asked to generate its own examples. Both manipulations improved performance by decreasing the probability assigned to specified alternatives and increasing that assigned to the residual. These results suggest that the effects of hypothesis generation are due to the additional hypotheses it brings to mind, because simply providing hypotheses to the subject has the same effect. Using a similar manipulation, Dube-Rioux and Russo (1988) found that generation of alternative hypotheses increased the judged probability of the residual relative to that of specified categories and attenuated the effect of omitting a category. Examination of the number of instances generated by the subjects showed that, when enough instances were produced, the effect of category omission was eliminated altogether.

Now consider a task in which subjects are asked to generate a hypothesis (e.g., to guess which film will win the best picture Oscar at the next Academy Awards ceremony) before assessing its probability. Asking subjects to generate the most likely hypothesis might actually lead them to consider several candidates in the process of settling on the one they prefer. This process amounts to a partial unpacking of the residual hypothesis, which should decrease the judged probability of the focal hypothesis. Consistent with this prediction, one study (Koehler, 1994) found that subjects asked to generate their own hypotheses assigned them a lower probability of being true than did other subjects presented with the same hypotheses for evaluation. The interpretation of these results – that hypothesis generation makes alternative hypotheses more salient – was tested by two further manipulations. First, providing a closed set of specified alternatives eliminated the difference between the generation and evaluation conditions. In these circumstances, the residual should be represented in the same way in both conditions. Second, inserting a distracter task between hypothesis generation and probability assessment was sufficient to reduce the salience of alternatives brought to mind by the generation task, increasing the judged probability of the focal hypothesis.

When to use it

  • Predicting election outcomes by listing all plausible candidates rather than focusing on the frontrunner.

  • Evaluating investment options by generating a full set of possible market scenarios before assessing which is most likely.

  • When considering possible explanations for symptoms, compare plausible alternatives rather than assigning confidence only to the first explanation suggested.

  • Risk assessment in project management by unpacking the 'other causes' category of project failure.

FROM THEORY TO EVERYDAY LIFE

In practice

01

Oscar Prediction Study

Koehler (1994) found that people assigned lower probabilities to hypotheses they generated than other participants assigned to the same hypotheses when presented for evaluation. The passage illustrates the proposed explanation with an Oscar prediction: choosing a favorite can bring competing films to mind and make alternatives more salient.

02

Residual Unpacking Experiment

Mehle et al. (1981) asked subjects to estimate the probability of specified causes for a problem. One group was given exemplar members of the residual ('other causes'), and another group was asked to generate their own examples. Both manipulations decreased the probability assigned to specified causes and increased that assigned to the residual, improving accuracy.

✳

A MOMENT TO REFLECT

Put it to work.

  1. When making a prediction, what are some ways you can systematically generate alternative hypotheses to avoid overconfidence?

  2. Why might generating your own hypothesis lead to lower confidence compared to being presented with the same hypothesis?

  3. How can you use the concept of unpacking the residual to improve the accuracy of your probability estimates in daily decisions?

Connected ideas

Another lens can bring the same problem into focus.

References

  1. Gettys, Mehle, & Fisher (1986) Study on Hypothesis Generation — Gettys, C. F., Mehle, T., & Fisher, S. (1986)
  2. Mehle et al. (1981) Study on Unpacking Residual Hypotheses — Mehle, T., Gettys, C. F., Manning, C., Baca, S., & Fisher, S. (1981)
  3. Lichtenstein, Fischhoff, & Phillips (1982) Overconfidence in Probability Judgments — Lichtenstein, S., Fischhoff, B., & Phillips, L. D. (1982)
  4. Dube-Rioux & Russo (1988) On the Effect of Hypothesis Generation on Probability Judgment — Dube-Rioux, L., & Russo, J. E. (1988)
  5. Koehler (1994) Hypothesis Generation and Probability Assessment — Koehler, D. J. (1994)

CONTINUE THE CONVERSATION

Source texts

  • Heuristics and Biases The Psychology of Intuitive Judgment (Thomas Gilovich, Dale Griffin, Daniel Kahneman)
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