My understanding is that there is an extensive body of evidence that people become more rational and put in more cognitive effort when there are real-money stakes involved; but I would welcome commentary from someone more familiar with the literature.
Hi Guy and Ian. To clarify, I have in mind bets which involve winning or losing amounts of money of at least 1 % of the net annual income, and ideally at least 10 %. For example, for some earning 30 k$ of net income per year, at least 300 $ (= 0.01*30*10^3), and ideally at least 3 k$ (= 0.1*30*10^3). For a sufficiently large amount of money at stake, people would either not accept the bet, or accept it after significant investigation.
My understanding is that there is an extensive body of evidence that people become more rational and put in more cognitive effort when there are real-money stakes involved; but I would welcome commentary from someone more familiar with the literature.
Hi Guy and Ian. To clarify, I have in mind bets which involve winning or losing amounts of money of at least 1 % of the net annual income, and ideally at least 10 %. For example, for some earning 30 k$ of net income per year, at least 300 $ (= 0.01*30*10^3), and ideally at least 3 k$ (= 0.1*30*10^3). For a sufficiently large amount of money at stake, people would either not accept the bet, or accept it after significant investigation.