I agree with AC...you're being too hard on the students. I doubt very much they were stating anything with confidence. It's quite possible that some of them didn't really care about understanding physics and were just trying to get the right answer to please the teacher, but others were probably just thinking out loud. Thinking "maybe it's heat conduction" might just be the first step to thinking "no, it can't be heat conduction," or even to realizing "I don't really understand heat conduction," and there is nothing wrong with this train of thought. They were probably "biased" towards the idea that there was some physical principle causing the effect, but that was entirely rational because the professor set them up to believe that.
Great story, though.
Constant made an important point: infinitely many rules are consistent with the evidence no matter how many instances you test. Therefore any guess you make must be influenced by prior expectations. And like lusispedro said, based on experience students probably put a lot more weight on rules based on simple equations than rules based on inequalities.
I'm sure I could get the percentage of people who guess correctly down to 0% by simply choosing the perfectly valid rule: "sequences (a,b,c) such that EITHER a less than b less than c OR b is a multiple of 73."
Why? Because rules of that sort are given low weight in subjects' priors.