The Effects of Control on Betting: Paradoxical Betting on Items of High Confidence with Low Value

Traditional decision theories emphasize the probabilities and values of possible outcomes, but decisions may also be influenced by perceived control, with control defined as probability alterability. In 3 experiments, participants were offered bets on their own answers to general knowledge questions, bets that are characterized by control. The bets were fair if participants' reported confidence was well calibrated, positively valued if participants were underconfident, but unfavorable when participants were overconfident. Bet acceptance was a steep, linear, increasing function of confidence that is termed paradoxical betting. This pattern was generally contrary to the value of bets (considered either as average outcome or as subjective utility) and was steeper in slope than matched bets on apparently random events in Experiment 3. The author argues that control is a fundamental determinant of decision making that is readily incorporated in some existing models of decision weighting.