Decision-making in a risky environment: the impact of complexity on participation and performance

This paper examines empirically the impact of complexity on levels of participation and performance in decision-making under uncertainty. The setting for the study is the UK off- course horserace betting market, which is characterised by important ecological advantages over laboratory or alternative naturalistic settings. Complexity is defined in terms of both the number of alternatives in the decision- maker's choice set (number of horses in a race) and the complexity of the attributes set for each horserace (handicap vs. non-handicap races).Contrary to earlier work in the area, the results indicate that bettors are not inhibited by complexity; indeed, participation rates are significantly higher for races with large numbers of runners (alternatives). Equally, and again contrary to earlier work, performance appears not to be adversely affected by the number of alternatives or the complexity of the attribute set. The robustness of the results is reinforced by adjustments which acknowledge and control for the differential random chance of correct decision-making across groups of events with differing complexity