Overestimating the Valuations and Preferences of Others

Abstract

People often make judgments about their own and others’ valuations and preferences. Across 12 studies (N=18,818), we find a robust bias in these judgments such that people overestimate the valuations and preferences of others. This overestimation arises because, when making predictions about others, people rely on their intuitive core representation of the experience (e.g., is the experience generally positive?) in lieu of a more complex representation that might also include countervailing aspects (e.g., is any of the experience negative?). We first demonstrate that the overestimation bias is pervasive for a wide range of positive (Studies 1-5) and negative experiences (Study 6). Furthermore, the bias is not merely an artifact of how preferences are measured (Study 7). Consistent with judgments based on core representations, the bias significantly reduces when the core representation is uniformly positive (Studies 8A-8B). Such judgments lead to a paradox in how people see others trade off between valuation and utility (Studies 9A-9B). Specifically, relative to themselves, people believe that an identically-paying other will get more enjoyment from the same experience, but paradoxically, that an identically-enjoying other will pay more for the same experience. Finally, consistent with a core representation explanation, explicitly prompting people to consider the entire distribution of others’ preferences significantly reduced or eliminated the bias (Study 10). These findings suggest that social judgments of others’ preferences are not only largely biased, but they also ignore how others make tradeoffs between evaluative metrics.

Keywords: overestimation bias, comparative judgments, valuation, preferences, paradox