Prediction That Conflicts With Judgment: The Low Absolute Likelihood Effect

How do people predict the outcome of an event from a set of possible outcomes? One might expect people to predict whichever outcome they believe to be most likely to arise. However, we document a robust disconnect between what people predict and what they believe to be most likely. This disconnect arises because people consider not only relative likelihood but also absolute likelihood when predicting. If people think that an outcome is both the most likely to arise and has a high absolute likelihood of arising, they regularly predict it to arise. However, if people believe that an outcome is the most likely to arise but has a low absolute likelihood (e.g., it has a 20% chance, and other outcomes have smaller chances), they less often choose it as their prediction, even though they know it is most likely. We find that, when the most likely outcome has a low absolute likelihood, the final outcome feels hard to foresee, which leads people to use arbitrary prediction strategies, such as following a gut feeling or choosing randomly, instead of predicting more logically. We further find that predictions are less likely to depart from the most likely outcome when manipulations encourage people to focus more on relative likelihood and less on the low absolute likelihood. People also exhibit a smaller disconnect when advising others than when predicting for themselves. Thus, contrary to common assumptions, predictions may often systematically depart from likelihood judgments. We discuss implications for research on judgments, predictions, and uncertainty.