Substantial evidence indicates that information is distorted during decision making. However, no studies have assessed the distortion of outcome and probability information in risky decisions or the effects of ambiguity on information distortion. This paper reports two studies involving six binary decisions (e.g., banning blood donations from people who have visited England, because of "mad cow disease"). In Study 1, participants distorted their evaluations of outcome and probability information in the direction of their preferred decision alternative and used these biased evaluations to update their preferences. Participants also evaluated the utilities of possible outcomes more positively when the outcomes could follow only from the preferred alternative and more negatively when they could follow only from the competing alternative. In Study 2, we manipulated ambiguity by describing outcomes and probabilities using either point estimates or ranges of values. Results replicated those of Study 1, with no effects of ambiguity on information distortion.
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