The Control Premium: A Preference for Payoff Autonomy

David Owens (), Zachary Grossman and Ryan Fackler

American Economic Journal: Microeconomics, 2014, vol. 6, issue 4, 138-61

Abstract: We document individuals' willingness to pay to control their own payoff. Experiment participants choose whether to bet on themselves or on a partner answering a quiz question correctly. Given participants' beliefs, which we elicit separately, expected-money maximizers would bet on themselves in 56.4 percent of the decisions. However, participants actually bet on themselves in 64.9 percent of their opportunities, reflecting an aggregate control premium. The average participant is willing to sacrifice 8 percent to 15 percent of expected asset-earnings to retain control. Thus, agents may incur costs to avoid delegating and studies inferring beliefs from choices may overestimate their results on overconfidence.

JEL-codes: C91 D12 D82 D83 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.4.138
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Citations: View citations in EconPapers (81)

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Working Paper: The Control Premium: A Preference for Payoff Autonomy (2012)
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