Betting on transitivity in probabilistic causal chains.

Causal reasoning is crucial to people's decision making in probabilistic environments. It may rely directly on data about covariation between variables (correspondence) or on inferences based on reasonable constraints if larger causal models are constructed based on local relations (coherence). For causal chains an often assumed constraint is transitivity. For probabilistic causal relations, mismatches between such transitive inferences and direct empirical evidence may lead to distortions of empirical evidence. Previous work has shown that people may use the generative local causal relations A → B and B → C to infer a positive indirect relation between events A and C, despite data showing that these events are actually independent (von Sydow et al. in Proceedings of the thirty-first annual conference of the cognitive science society. Cognitive Science Society, Austin, 2009, Proceedings of the 32nd annual conference of the cognitive science society. Cognitive Science Society, Austin, 2010, Mem Cogn 44(3):469-487, 2016). Here we used a sequential learning scenario to investigate how transitive reasoning in intransitive situations with negatively related distal events may relate to betting behavior. In three experiments participants bet as if they were influenced by a transitivity assumption, even when the data strongly contradicted transitivity.