Compatibility Hypothesis
The compatibility hypothesis states that a predictor is given more weight when it matches the scale of the criterion (e.g., predicting grade using grade data rather than rank data). Studies show that people overweight compatible attributes even in choice tasks without numeric anchoring.
THE IDEA
Study 2: Prediction of Academic Performance
Our second test of the compatibility hypothesis involves the prediction of a student’s grade in a course. We asked 258 subjects from the University of Oregon to predict the performance of 10 target students in a history course on the basis of the students’ performance in two other courses: English literature and philosophy. For each of the 10 targets, the subjects were given a letter grade (from A+ to D) in one course and a class rank (from 1 to 100) in the other course. Half the subjects predicted the students’ grade in history, whereas the other half predicted the students’ class rank in history. Each of the four combinations of performance measures (grade/rank) and courses (literature/philosophy) was presented to a different group of subjects.
The compatibility hypothesis implies that a given predictor (e.g., grade in philosophy) will be given more weight when the criterion is expressed on the same scale (e.g., grade in history) than when it is expressed on a different scale (e.g., rank in history). The relative weight of grades to ranks, then, will be higher in the group that predicts grades than in the group that predicts ranks.
As in the previous study, we first correlated the criteria with the predictors. The (zero-order) correlations of g with G and R were .83 and .82, respectively, whereas the correlations of r with G and R were .70 and .91, respectively, in accord with the compatibility hypothesis. We next regressed the mean predictions of grades and ranks onto the two predictors. The letter grades were coded D = 1, C− = 2*, . . .* A+ = 10. (To make the regression weights positive, the ranking order was reversed.) The multiple regression for both grades and ranks fit the average data very well with multiple correlations of .99. Let g**i and r**i denote the mean observed predictions of grade and rank, respectively, for a student with a grade G**i in one course and a rank R**i the other course. There was no significant interaction between the scale (rank/grade) and the course (literature/philosophy); therefore, the data for the two courses were pooled. The multiple-regression equations, then, take the form
g**i = αgG**i + β**g R**i
r**i = α**r G**i + β**r R**i,
when the independent variables are expressed in standardized units. Thus, α g and α**r are the regression weights for the grades (G**i) estimated from the predicted grades and ranks, respectively. Similarly, β**g and β**r are the corresponding weights for the second predictor, class rank. The relative weights for the first predictor in each of the two response modes are
A**g = αg/(α**g + β**g)
A**r = αρ/(α**r + β**r).
These values measure the relative contribution of G**i in the prediction of grade and rank, respectively. Because the grades and ranks are monotonically related, A**g and A**r should be approximately equal if the weighting of the dimensions is independent of the response scale. However, if the match between the predictor and the criterion enhances the weight of the more compatible predictor, then A**g should exceed A**r.
The values estimated from the regression equations were A**g = .51 and A**r = .40, in accord with the compatibility hypothesis. Thus, grade in philosophy was weighted more heavily in the prediction of grade in history than in prediction of rank in history. Similarly, rank in philosophy was weighted more heavily in the prediction of rank in history than in the prediction of grade history.
To obtain an ordinal test of the compatibility hypothesis within the data for each subject, we analyzed the reversals of order induced by the change weights. There were 21 pairs of students (i, j) in which G**i > Gj and Rj > R**i. If G is weighted more heavily than R in the prediction of grades and r is weighted more heavily than G in the prediction of rank, we would expect g**i > g**j and r**j > r**i.
Indeed, subjects who predicted grades favored the student with the higher G 58% of the time, whereas subjects who predicted rank favored the student with the higher G only 42% of the time. (Ties were excluded from this analysis.) This difference is statistically significant (p *< .*001). Recall that subjects did not compare students directly; the ordering was inferred from their predictions.
The compatibility effects observed in the previous two studies may be mediated by a process of anchoring and adjustment. Subjects may use the score on the compatible variable (the attribute that matches the criterion) as an anchor and then adjust this number up or down according to the value of the noncompatible variable. Because adjustments of an anchor are generally insufficient (Slovic & Lichtenstein, 1971; Tversky & Kahneman, 1974), the compatible attribute would be overweighted. An anchoring and adjustment process, therefore, provides a natural mechanism for generating compatibility effects. To test whether compatibility effects occur in the absence of anchoring, we replaced the prediction task described previously with a choice task in which the subject is no longer required to make a numerical prediction that would invoke anchoring. The following study, then, investigates the compatibility hypothesis in a context in which anchoring and adjustment are unlikely to play a significant role.
Seventy-eight Stanford undergraduates were presented with 20 pairs of students taken from the stimuli used in Study 2. In each pair, one student had a higher grade and the other a higher rank. Half the subjects were asked to predict, for each pair, which student would achieve a higher grade in history, whereas the remaining subjects were asked to predict, for each pair, which student would achieve a higher rank in history. Because both groups were asked to predict only which of two students would do better in history and not to make a numeric prediction, their tasks were virtually identical. Nevertheless, the student with the higher grade was selected 56% of the time by the grade group and only 49% of the time by the rank group (p *< .*05), indicating that the compatibility effect is present even in a choice task that does not require a quantitative response and is, therefore, unlikely to involve an adjustment of a numeric anchor. The strategy of anchoring and adjustment, however, probably contributes to the compatibility effect observed in numeric predictions.
When to use it
Predicting a student's final exam score based on their grades in other courses vs. their class rankings.
Investment analysts forecasting stock returns using data expressed in percentage changes versus dollar amounts.
Medical diagnosis: weighting specific test results (e.g., blood pressure numbers) more heavily when predicting continuous outcomes like risk scores versus categorical outcomes like disease presence.
Employee evaluation: using performance ratings on the same scale as the overall evaluation criteria can bias decisions.
FROM THEORY TO EVERYDAY LIFE
In practice
Predicting History Grades from Philosophy and Literature
In Study 2, 258 subjects predicted either the grade or class rank in a history course for 10 target students based on their letter grade in one course and class rank in the other (philosophy or literature). Results showed that grade in philosophy was weighted more heavily when predicting grade in history (A_g = .51) than when predicting rank in history (A_r = .40). Similarly, rank in philosophy was weighted more heavily in predicting rank in history than in the prediction of grade history. Under the compatibility hypothesis, predictors are given more weight when they match the scale of the criterion.
Choice Task without Numeric Anchoring
Seventy-eight Stanford undergraduates were presented with pairs of students where one had a higher grade and the other a higher rank. Half predicted which would achieve a higher grade in history, half predicted which would achieve a higher rank. Despite the tasks being nearly identical, the high-grade student was chosen 56% of the time in the grade group vs. 49% in the rank group (p<.05), demonstrating compatibility effects even without numeric anchoring.
A MOMENT TO REFLECT
Put it to work.
Consider a time when you had to make a prediction based on conflicting information. Did you automatically give more weight to information that was presented in the same format as your desired outcome?
How might the compatibility hypothesis affect performance evaluations in the workplace if managers rate employees using numeric scales versus categorical labels?
Think of a decision you made recently that involved comparing options. Were you influenced by the compatibility of the information format with your decision criteria?
References
- Slovic, P., & Lichtenstein, S. (1971). Comparison of Bayesian and regression approaches to the study of information processing in judgment. — Slovic and Lichtenstein (1971)
- Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. — Tversky and Kahneman (1974)
CONTINUE THE CONVERSATION
Source texts
- Heuristics and Biases The Psychology of Intuitive Judgment (Thomas Gilovich, Dale Griffin, Daniel Kahneman)