I am not a psychology major, so forgive me if I'm misusing terms.

So on an exam, we had a question about signal detection, and it defined a conservative person as someone who **always** tend to reply negatively ("no"-s), rather than agree ("yes"-s).

I believe that this isn't correct. Consider the TSA for example, they are extremely liberal in the sense that they would screen you even when they have minimal suspicions about you. However, the percentage of people they screen is still very low, because the probability of the signal itself is very low.

Do you know any source in literature that could point out why that is wrong? Or maybe could you come up with a counter-argument that would make sense.

As I said in this answer, for these types of questions I really like *Detection Theory: A User's Guide* by Macmillan and Creelman. They consider 3 types of bias ($c$, $c'$, and $eta$) that differ in how they behave when the index of sensitivity $d'$ changes, but all three of their definitions agree with your professor that a conservative observer always replies *no* more often than *yes*, regardless of the probability of a *signal* being present. All three definitions also lead to the conclusion that the *ideal* (maximum likelihood) observer is biased when the probability of a *signal* being present is not equal to 0.5 (with the standard Gaussian distributions with equal variance assumptions). While it may be uncomfortable to you that the *ideal* observer is *biased*, this happens all the time in estimation. That said, Macmillan and Creelman defined three different biases, there is no reason we cannot define a fourth that behaves as you want it to…

I suggest starting with Macmillan and Creelman's definition of $eta$. They define $eta$ to be equal to $p(x|S_2)/p(x|S_1)$ where $p(x|S_1)$ is the probability of observing $x$ given stimulus $S_1$. Within their framework, an unbiased observer has a $eta$ of one. If we define $eta'$ to be $p(S_2|x)/p(S_1|x)$ and an unbiased observer as having a $eta'$ equal to 1, then the ideal observer is unbiased. That seems like a nice result. In the case where $p(S_1)$ is equal to $p(S_2)$, $eta$ is equal to $eta'$, so that is good too. When $p(S_1)$ is less than $p(S_2)$ a conservative observer could say *yes* more than *no*, which I don't like, but that is the case when we force the ideal observer to be unbiased.