Risk, complexity, and deviations from expected-value maximization: Resultsof a lottery choice experiment

Varying several parameters of single-stage lottery choice tasks we investig ate the question which features of a decision task lead subjects to deviate from maximizing expected monetary value (EV). Despite small differences in EV between the two lotteries in the choice sets, the subjects on average c hose the lottery with the higher EV in every task. Risk avoidance occurs, b ut not consistently over all tasks. Further results are that subjects prefe r less complex lotteries over more complex ones, and that risk matters the more the less complex the decision task is. (C) 1999 Elsevier Science B.V. All rights reserved. PsycINFO classification: 2300; 2340 JEL classification : C91; D81.