Evaluations of Single- and Repeated-Play Gambles

Choices and evaluations of risky prospects often violate norms of expected utility theory and the underlying normative principles of rational decision-making. However, when risky prospects are represented as being repeatedly instantiated, choices and evaluations often change to conform more closely to the long-run perspective reflected in normative models. Differences between responses for single and repeated gambles have been analyzed normatively, explored empirically, and evaluated theoretically. Normative analyses have argued both for and against changing behavior for single and repeated gambles. Empirically, shifts in behavior for single and repeated risky prospects are found to be common, stronger when outcomes are perceived as fungible, and stronger when the repeated outcome distribution is displayed. Furthermore, these shifts have been found to occur in both laboratory and real-world settings and have been considered a possible moderator of violations of expected utility theory. A variety of theoretical explanations are posited to explain this behavior, including those that emphasize consequences of loss aversion as well as those that implicate alternative bases for evaluating single and repeated cases.

Keywords: EU theory; expected value; binomial distribution; Samuelson's bet; normative analyses; repeated gambles; loss aversion