December 6 , 2006. 3:00-4:30pm. Porter Hall 223D, Carnegie Mellon University

When it's rational for the majority to believe that they are at less risk than others

Presenter: Don Moore, Tepper School of Business, Carnegie Mellon University

Abstract:
Numerous studies have found that people expect their futures to be better than others'. Recent research has shown that this comparative optimism effect is restricted to frequent positive events and rare negative events, and that on average people believe their futures will be worse than average for rare positive events and common negative events. I will discuss two explanations that offer simple explanations for these complex results: differential information and conflation.

  • The differential information explanation highlights the fact that people generally have better information about themselves than they do about others. As a result, estimates of others will be regressive. When people know they are exceptionally likely or unlikely to experience something, they often make the (sensible) inference that others' chances are less extreme.

  • The conflation explanation points out that the strength of comparative optimism effects vary depending on how it is measured. When the comparative judgment is assessed using a subjective verbally-anchored 7-point scale, the biases are stronger than when the question is asked using less subjective scales. Many studies showing comparative optimism effects may simply be demonstrating that participants are confused between absolute and comparative evaluation.

Regression and conflation often occur simultaneously, contributing to the robustness of comparative optimism effects.