People Place Larger Bets When Risky Choices Provide a Postbet Option to Cash Out

Abstract

After a risky choice, decision makers must frequently wait out a delay period before the outcome of their choice becomes known. In contemporary sports-betting apps, decision makers can “cash out” of their bet during this delay period by accepting a discounted immediate payout. An important open question is how availability of a postchoice cash-out option alters choice. We investigated this question using a novel gambling task that incorporated a cash-out option during the delay between bet and outcome. Across two experiments ( N = 240 adults, recruited via Prolific), cash-out availability increased participants’ bet amounts by up to 35%. Participants who were more likely to cash out when odds deteriorated were less likely to cash out when odds improved. Furthermore, the effect of cash-out availability on bet amounts was positively correlated with individual differences in cash-out propensity for bets with deteriorating odds only. These results suggest that cash-out availability may promote larger bets by allowing bettors to avoid losing their entire stake.