Partition Dependence in Subjective Probability Judgment

DRAFT: 2/16/05 Comments welcome Subjective probability assessment in decision analysis: Partition dependence and bias toward the ignorance prior Craig R. Fox Robert T. Clemen The Anderson School of Management Fuqua School of Business and Department of Psychology Duke University University of California at Los Angeles Running Head: Partition Dependence of Subjective Probabilities Address Correspondence to: Robert T. Clemen Fuqua School of Business Duke University, Box 90120 Durham, NC 27708-0120 919-660-8005 clemen@duke.edu Subjective probability assessment in decision analysis: Partition dependence and bias toward the ignorance prior Abstract Decision and risk analysts have considerable discretion in designing procedures for eliciting subjective probabilities. One of the most popular approaches is to specify a particular set of exclusive and exhaustive events for which the assessor provides such judgments. We show that assessed probabilities are biased toward a uniform distribution over all events into which the relevant sample space happens to be partitioned. This gives rise to judged probabilities that vary systematically with the partition of the sample space that is being evaluated. We surmise that a typical assessor begins with an “ignorance prior” distribution that assigns equal probabilities to all specified events, then insufficiently adjusts those ...