People place larger bets when risky choices provide a post-bet option to ‘cash out’

Abstract

After a risky choice, decision-makers must frequently wait out a delay period before the outcome of the 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 post-choice 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 recruited via Prolific), cash-out availability increased participants’ bet amounts by up to 35%. Likelihood of cashing out was anticorrelated between bets with improving versus worsening odds, and the effect of cash-out availability on bet amount was correlated with likelihood of cashing out only in bets with worsening odds. Results suggest that cash-out availability may promote larger bets by allowing bettors to avoid losing their entire stake.