Betting Your Favorite to Win: Costly Reluctance to Hedge Desired Outcomes

References

• Anderson CJ (2003) The psychology of doing nothing: Forms of decision avoidance result from reason and emotion. Psych. Bull. 129(1):139–167.Crossref, Google Scholar
• Baker L, Emery R (1993) When every relationship is above average. Law Human Behav. 17(4):439–450.Crossref, Google Scholar
• Bem DJ (1972) Self-perception theory. Berkowitz L, ed. Advances in Experimental Social Psychology, Vol. 6 (Academic Press, New York), 1–62.Crossref, Google Scholar
• Benartzi S, Thaler RH, Utkus SP, Sunstein CR (2007) The law and economics of company stock in 401(k) plans. J. Law Econom. 50(1):45–79.Crossref, Google Scholar
• Bernoulli D (1954) Exposition of a new theory on the measurement of risk. Econometrica 22(1):23–36. [First published 1738.]Crossref, Google Scholar
• Bodner R, Prelec D (2003) Self-signaling and diagnostic utility in everyday decision making. Brocas I, Carrillo JD, eds. The Psychology of Economic Decisions Vol. 1 (Oxford University Press, New York), 105–126.Google Scholar
• Camerer C (2003) Behavioral Game Theory: Experiments in Strategic Interaction (Princeton University Press, Princeton, NJ).Google Scholar
• Cantril H (1938) The prediction of social events. J. Abnormal Soc. Psych. 33(3):364–389.Crossref, Google Scholar
• Cooper I, Kaplanis E (1994) Home bias in equity portfolios, inflation hedging, and international capital market equilibrium. Rev. Financial Stud. 7(1):45–60.Crossref, Google Scholar
• Fehr E, Fischbacher U (2004) Social norms and human cooperation. Trends Cognitive Sci. 8(4):185–190.Crossref, Google Scholar
• Fellner G, Maciejovsky B (2003) The equity home bias: Contrasting an institutional with a behavioral explanation. Max Planck Institute of Research into Economic Systems, Papers on Strategic Interaction 3-2003, Max Planck Institute for Economics, Jena, Germany.Google Scholar
• Fischer GW, Kamlet MS, Fienberg SE, Schkade D (1986) Risk preferences for gains and losses in multiple objective decision making. Management Sci. 32(9):1065–1086.Link, Google Scholar
• Foad H (2010) Familiarity bias. Baker HK, Nofsinger JR, eds. Behavioral Finance: Investors, Corporations, and Markets (John Wiley & Sons, Hoboken, NJ), 277–294.Crossref, Google Scholar
• Goffman E (1959) The Presentation of Self in Everyday Life (Doubleday, Oxford, UK).Google Scholar
• Harmon-Jones E (2000) Cognitive dissonance and experienced negative affect: Evidence that dissonance increases experienced negative affect even in the absence of aversive consequences. Personality Soc. Psych. Bull. 26(12):1490–1501.Crossref, Google Scholar
• Hayes AF (2013) Introduction to Mediation, Moderation, and Conditional Process Analysis (Guilford Press, New York).Google Scholar
• Hayes SP Jr (1936) The predictive ability of voters. J. Soc. Psych. 7(2):183–191.Crossref, Google Scholar
• Heider F (1958) The Psychology of Interpersonal Relations (Lawrence Erlbaum Associates, Hillsdale, NJ).Crossref, Google Scholar
• Heyman J, Ariely D (2004) Effort for payment: A tale of two markets. Psych. Sci. 15(11):787–793.Crossref, Google Scholar
• Hoch SJ (1985) Counterfactual reasoning and accuracy in predicting personal events. J. Experiment. Psych.: Learn., Memory, Cognition 11(4):719–731.Crossref, Google Scholar
• Hogg MA, Abrams D, Otten S (2004) The social identity perspective: Intergroup relations, self-conception and small groups. Small Group Res. 35(3):246–276.Crossref, Google Scholar
• Hsee CK, Kunreuther HC (2000) The affection effect in insurance decisions. J. Risk Uncertainty 20(2):141–159.Crossref, Google Scholar
• Inbar Y, Pizarro DA, Cushman F (2012) Benefiting from misfortune: When harmless actions are judged to be morally blameworthy. Personality Soc. Psych. Bull. 38(1):52–62.Crossref, Google Scholar
• Irwin JR, McClelland GH (2001) Misleading heuristics and moderated multiple regression models. J. Marketing Res. 38(1):100–109.Google Scholar
• Kahneman D, Tversky A (1979) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–291.Crossref, Google Scholar
• Kelley HH, Thibaut JW (1978) Interpersonal Relations: A Theory of Interdependence (John Wiley & Sons, New York).Google Scholar
• Krizan Z, Windschitl PD (2007) The influence of outcome desirability on optimism. Psych. Bull. 133(1):95–121.Crossref, Google Scholar
• Krizan Z, Miller JC, Johar O (2010) Wishful thinking in the 2008 U.S. presidential election. Psych. Sci. 21(1):140–146.Crossref, Google Scholar
• Krosch AR, Figner B, Weber EU (2012) Choice processes and their post-decisional consequences in morally conflicting decisions. Judgment Decision Making 7(3):224–234.Google Scholar
• Levitt SD (2004) Why are gambling markets organized so differently from financial markets? Econom. J. 114(495):223–246.Google Scholar
• Lichtenstein S, Slovic P (1971) Reversals of preference between bids and choices in gambling decisions. J. Experiment. Psych. 89(1):46–55.Crossref, Google Scholar
• Massey C, Simmons JP, Armor DA (2011) Hope over experience: Desirability and the persistence of optimism. Psych. Sci. 22(2): 274–281.Crossref, Google Scholar
• Meulbroek L (2005) Company stock in pension plans: How costly is it? J. Law Econom. 48(2):443–474.Crossref, Google Scholar
• Morewedge CK, Kahneman D (2010) Associative processes in intuitive judgment. Trends Cognitive Sci. 14(10):435–440.Crossref, Google Scholar
• Morewedge CK, Krishnamurti T, Ariely D (2014) Focused on fairness: Alcohol intoxication increases the costly rejection of inequitable rewards. J. Experiment. Soc. Psych. 50(1):15–20.Crossref, Google Scholar
• Morse A, Shive S (2011) Patriotism in your portfolio. J. Financial Markets 14(2):411–440.Crossref, Google Scholar
• Payne JW, Laughhunn DJ, Crum R (1984) Multiattribute risky choice behavior: The editing of complex prospects. Management Sci. 30(11):1350–1361.Link, Google Scholar
• Powell C, Van Vugt M (2003) Genuine giving or selfish sacrifice? The role of commitment and cost level upon willingness to sacrifice. Eur. J. Soc. Psych. 33(3):403–412.Crossref, Google Scholar
• Risen JL, Gilovich T (2008) Why people are reluctant to tempt fate. J. Personality Soc. Psych. 95(2):293–307.Crossref, Google Scholar
• Rosenthal R, Rosnow RL (1991) Essentials of Behavioral Research: Methods and Data Analysis (McGraw-Hill, Boston).Google Scholar
• Rovell D (2014) Auburn fan loses 50K payday. ESPN.com (January 7), http://www.espn.com/college-football/story/_/id/10251632/auburn-tigers-fan-made-100-bet-win-national-title-500-1-odds.Google Scholar
• Shafir E, LeBoeuf RA (2004) Context and conflict in multiattribute choice. Koehler DJ, Harvey N, eds. Blackwell Handbook of Judgment and Decision Making (Blackwell Publishing, New York), 341–360.Crossref, Google Scholar
• Simmons JP, Massey C (2012) Is optimism real? J. Experiment. Psych.: General 141(4):630–634.Crossref, Google Scholar
• Simmons JP, Nelson LD (2006) Intuitive confidence: Choosing between intuitive and nonintuitive alternatives. J. Experiment. Psych.: General 135(3):409–428.Crossref, Google Scholar
• Slonim R, Roth AE (1998) Learning in high stakes ultimatum games: An experiment in the Slovak Republic. Econometrica 66(3):569–596.Crossref, Google Scholar
• Smith CW, Stulz RM (1985) The determinants of firms’ hedging policies. J. Financial Quant. Anal. 20(4):391–405.Crossref, Google Scholar
• Strong N, Xu X (2003) Understanding the equity home bias: Evidence from survey data. Rev. Econom. Statist. 85(2):307–312.Crossref, Google Scholar
• Swann WB Jr, Gómez Á, Dovidio JF, Hart S, Jetten J (2010) Dying and killing for one’s group identity fusion moderates responses to intergroup versions of the trolley problem. Psych. Sci. 21(8):1176–1183.Crossref, Google Scholar
• Tang S, Morewedge CK, Larrick RP, Klein J (2016) Disloyalty aversion: Greater reluctance to bet against close others than the self. Working paper, Duke University, Durham, NC.Google Scholar
• Tetlock PE (2003) Thinking the unthinkable: Sacred values and taboo cognitions. Trends Cognitive Sci. 7(7):320–324.Crossref, Google Scholar
• Tykocinski OE (2008) Insurance, risk, and magical thinking. Personality Soc. Psych. Bull. 34(10):1346–1356.Crossref, Google Scholar
• Van Lange PA, Rusbult CE, Drigotas SM, Arriaga XB, Witcher BS, Cox CL (1997) Willingness to sacrifice in close relationships. J. Personality Soc. Psych. 72(6):1373–1395.Crossref, Google Scholar
• von Neumann J, Morgenstern O (1944) Theory of Games and Economic Behavior (Princeton University Press, Princeton, NJ).Google Scholar
• von Winterfeldt D, Edwards W (1986) Decision Analysis and Behavioral Research (Cambridge University Press, Cambridge, UK).Google Scholar