Detecting and Reacting to Change: The Effect of Exposure to Narrow Categorizations

Abstract

The ability to detect a change, to accurately assess the magnitude of the change, and to react to that change in a commensurate fashion, is of critical importance in many decision domains. Thus, it is important to understand the factors that systematically affect people’s reactions to change. In this paper we document a novel effect: decision makers’ reactions to a change (e.g., a visual change, or a technology change), are systematically affected by the type of categorizations they encounter in an unrelated prior task (e.g., the response categories associated with a survey question). We find that prior exposure to narrow, as opposed to broad categorizations, improves decision makers’ ability to detect change and leads to stronger reactions to a given change. These differential reactions occur because the prior categorizations, even though unrelated, alter the extent to which the subsequently presented change is perceived as either a relatively large change or a relatively small one.