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Preference Towards Control In Risk Taking: Control, No Control, Or Randomize?

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Executive Summary

This paper experimentally investigates preference towards different methods of control in risk taking. Participants are asked to choose between different ways for choosing which numbers to bet on for a gamble. They can choose the numbers themselves (control), let the experimenter choose (no control), or randomize. It is found that in addition to the more conventional preference for control, some participants prefer not to control, or randomization. These preferences are robust as participants are willing to pay a small amount of money to implement their preferred method. Most of the participants believe that the winning probability under different methods is the same. Thus, their preferences are not driven by bias in probability belief such as those induced by illusion of control.

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