The Intrinsic Value of Control: The Propensity to Under-Delegate in the Face of Potential Gains and Losses

18 Pages Posted: 17 Feb 2016 Last revised: 29 Dec 2016

Sebastian Bobadilla-Suarez

Affective Brain Lab, Department of Experimental Psychology, University College London

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Tali Sharot

University College London - Affective Brain Lab, Department of Experimental Psychology

Date Written: February 15, 2016

Abstract

Human beings are often faced with a pervasive problem: whether to make their own decisions or to delegate decision tasks to someone else. Here, we test whether people are inclined to forgo monetary rewards in order to retain agency when faced with choices that could lead to losses and gains. In a simple choice task, we show that even though participants have all the information needed to maximize rewards and minimize losses, they choose to pay in order to control their own payoff. This tendency cannot be explained by participants’ overconfidence in their own ability, as their perceived ability was elicited and accounted for. Rather, the results reflect an intrinsic value for choice, which emerges in the domain of both gains and losses. Moreover, our data indicates that participants are aware that they are making suboptimal choices in the normative sense, but do so anyway, presumably for psychological gains.

Keywords: control premium, delegation, agency, decision rights, gains, losses

JEL Classification: C91, D03, D81

Suggested Citation

Bobadilla-Suarez, Sebastian and Sunstein, Cass R. and Sharot, Tali, The Intrinsic Value of Control: The Propensity to Under-Delegate in the Face of Potential Gains and Losses (February 15, 2016). Available at SSRN: https://ssrn.com/abstract=2733142 or http://dx.doi.org/10.2139/ssrn.2733142

Sebastian Bobadilla Suarez

Affective Brain Lab, Department of Experimental Psychology, University College London ( email )

London
United Kingdom

HOME PAGE: http://affectivebrain.com

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Tali Sharot

University College London - Affective Brain Lab, Department of Experimental Psychology ( email )

London
United Kingdom

HOME PAGE: http://affectivebrain.com

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