Measuring subjective decision confidence

Information on decision confidence provides important insights into decision-making. In place of self-reported confidence statements in earlier studies, this study examines an incentivized approach to elicit quantitative decision confidence experimentally and theoretically. This approach allows the individual to choose randomization probabilities according to which she receives each option instead of committing to one option as in standard binary choices. We demonstrate theoretically that randomization probabilities reveal the individual's decision confidence level. In an experiment that elicited both randomization probabilities and confidence statements about standard binary choices from subjects, we find that randomization probabilities varied systematically with decision confidence and are a viable measure of decision confidence. Our study contributes to the discussion of convex preference by relating preference for randomization to an intuitive psychological concept of decision confidence.