Do you expect a specific stock to perform better if many other stocks in the portfolio are classified into the same industry? Similarly, do you feel that an Olympic athlete’s chances of winning the gold could be affected by how many of the other finalists are from the same country?
Clearly, category size shouldn’t matter. However, Huntsman Marketing Professor Aaron Brough and a colleague discovered that people seem to have a category size bias in which grouping possible outcomes together into a large category can make them seem more likely to occur.
Dr. Brough’s research, which will appear in the Journal of Consumer Research, provides new insights regarding how categorization can impact perceptions of risk and probability. For example, when policy makers are crafting health-related messages for consumers, grouping a highly preventable disease such as lung cancer with a large number of other potential health risks could increase the perceived risk of contracting lung cancer, which may in turn persuade consumers to visit their doctor for regular screenings.