One-shot lotteries in the park

Abstract

How do people manipulate their environment when balancing trade-offs between probability of success and payoff?Individuals in a city park played a simple lottery using a small set of marbles placed in an urn.Participants had the ability to actively improve their chances of winning but only by reducing the amount of money that they could possibly win.Hence, participants controlled the lottery's intuitive trade-off between probability of success and potential payout.Across four different lottery structures, participants, on average, behaved systematically safer than the optimal strategy that maximizes expected gain.We explore two different accounts of this suboptimal choice behavior: probability distortion, and intrinsic utility of winning.

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