Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: We examine complexity in binary and convex choice tasks over money. The binary task is between two amounts of money. The convex choice task has individuals design lotteries for themselves over two monetary amounts. Both tasks have straightforward payoff maximizing answers, however we find markedly different behavior. In the binary choice task, individuals maximize payoffs in 97% of choices. In contrast, our main convex choice task finds over 70% of decisions place some chance on the smaller amount of money. We run additional treatments to reduce confusion, eliminate probabilistic reasoning, and examine choice consistency and find no qualitative differences. New experiments have further examined this behavior when individuals face time dated decisions and making the convex budget discrete. We find similar qualitative behavior.