Psychology Colloquium: Dr Daniel Bennett: Take the money and run: investigating the decision to ‘cash out’ of a risky bet
Dr Daniel Bennett (Monash University)
Contemporary sports-betting products offer a raft of novel in-play betting features designed to incentivise customer engagement. Among these, one prominent feature available on most interactive betting platforms is ‘cash out’. The cash-out feature allows customers who have wagered on an event to forgo their stake in the event prior to its conclusion in exchange for a (discounted) early payout. In spite of its ubiquity in the world of sports betting, it remains unknown how and why bettors use this feature, as well as whether the mere availability of a cash-out option affects betting behaviour. In this talk I will report the results of several recent experiments using a novel experimental gambling task in which participants were offered the option to cash out of their risky bets. Briefly, results suggest (a) that the availability of a cash-out option may incentivise participants to place larger wagers, and (b) that individual differences in use of the cash-out feature are associated with inter-individual differences in self-reported impulsivity in unexpected ways. Although I will focus on the application of these findings to gambling, they also have bearing on a broader class of financial decisions, namely those in which the owner of a risky asset must weigh the guaranteed immediate returns of selling the asset against the potential costs and benefits of retaining it into the future.