The interaction of value and subjective probability in risky decision-making



A central assumption of models of risky decision-making is that value and subjective probability contribute independently to decisions. A number of studies have tested this assumption with a variety of experimental designs including asking subjects to make direct estimates of probability, guesses, wagers, and ratings of gambles. The results of these suggest that there is evidence of interaction, particularly when subjects choose between events of equal probability, one of which is valued. Theories of the conditions under which interaction occurs were considered, and there is support for the importance of distinctions between chance and skill control of outcomes, simple and complex tasks, and well- and ill-defined tasks.