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Complexity and Choice under Risk

Wendle, David LU (2025) NEKP01 20251
Department of Economics
Abstract
We investigate the role of complexity in choice under risk through an online experiment in which complexity is manipulated by the use of tokens and tokens-to-dollar conversion rates. This novel experimental design allows us to represent the same dollar amount with different numbers of tokens and thus create choice options that are identical in terms of value but different in terms of complexity. We employ this design in a binary choice setting in which subjects make a series of choices between a ”lottery option” and a ”sure option”. Despite evidence of a treatment effect on the perceived complexity of choice tasks, no treatment effect is found on choices. These findings challenge recent claims that complexity drives many of the important... (More)
We investigate the role of complexity in choice under risk through an online experiment in which complexity is manipulated by the use of tokens and tokens-to-dollar conversion rates. This novel experimental design allows us to represent the same dollar amount with different numbers of tokens and thus create choice options that are identical in terms of value but different in terms of complexity. We employ this design in a binary choice setting in which subjects make a series of choices between a ”lottery option” and a ”sure option”. Despite evidence of a treatment effect on the perceived complexity of choice tasks, no treatment effect is found on choices. These findings challenge recent claims that complexity drives many of the important behavioral anomalies in choice under risk. (Less)
Please use this url to cite or link to this publication:
author
Wendle, David LU
supervisor
organization
course
NEKP01 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Risk preferences, complexity, prospect theory, probability weighting
language
English
id
9195582
date added to LUP
2025-09-12 11:18:12
date last changed
2025-09-12 11:18:12
@misc{9195582,
  abstract     = {{We investigate the role of complexity in choice under risk through an online experiment in which complexity is manipulated by the use of tokens and tokens-to-dollar conversion rates. This novel experimental design allows us to represent the same dollar amount with different numbers of tokens and thus create choice options that are identical in terms of value but different in terms of complexity. We employ this design in a binary choice setting in which subjects make a series of choices between a ”lottery option” and a ”sure option”. Despite evidence of a treatment effect on the perceived complexity of choice tasks, no treatment effect is found on choices. These findings challenge recent claims that complexity drives many of the important behavioral anomalies in choice under risk.}},
  author       = {{Wendle, David}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Complexity and Choice under Risk}},
  year         = {{2025}},
}