Visual simulation and subjective probability estimation: When seeing is believing.

Despite the volume of research examining overprecision, the underlying drivers of individual differences in probability estimations remain elusive. I propose that visual processing through mental simulation of small samples is a cognitive mechanism influencing the relative degrees of over and underprecision. I conducted three preregistered experiments contrasting probability estimates between a control group and a treatment group, where participants were prompted to engage in greater visual processing by mentally simulating outcomes. In Study 1, participants estimate a binomial distribution of a ball drop machine. I find that engaging in visual simulation led to higher estimates of values near the distributions’ center, while the control group provided higher estimates for the distributions’ tails. Although the control group is more underprecise, visual simulation could arguably increase estimation accuracy and not overconfidence. To separate these effects, I modify the ball drop mechanism in Study 2 to produce a flatter distribution. The results show that the control group is well-calibrated, but the visual simulation group is overprecise. Study 3 investigates a boundary condition where participants mentally simulated multiple outcomes. The results demonstrate that an increase in the variance of imagined outcomes lowers subjective estimates near the center of the distribution, diminishing the treatment effect.