When a risky prospect is valued more than its best possible outcome

In this paper, we document a violation of normative and descriptive models of decision making under risk. In contrast to uncertainty effects found by Gneezy, List and Wu (2006), some subjects in our experiments valued lotteries more than the best possible outcome. We show that the overbidding effect is more strongly related to individuals' competitiveness traits than comprehension of the lottery's payoff mechanism.

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Year of publication:	2012
Authors:	Drichoutis, Andreas C. ; Nayga, Rodolfo M. ; Lusk, Jayson L. ; Lazaridis, Panagiotis
Published in:	Judgment and Decision Making. - Society for Judgment and Decision Making, ISSN 1930-2975. - Vol. 7.2012, 1, p. 1-18
Publisher:	Society for Judgment and Decision Making
Subject:	Decision making under risk \| competitiveness \| lottery payoff comprehension \| experiments

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Extent:	application/pdf text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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