The prediction of decisions among bets.

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Abstract
A very simple mathematical model is developed for predicting choices among bets. This model, based on the concepts of subjective value or utility of money and subjective probability, asserts that subjects choose the bet with the maximum subjectively expected utility. An experiment was designed to test this model. The utility of money was measured by assuming that the utility of N identical bets is N times the utility of one such bet[long dash]an assumption which the results of the experiment verify. Subjective probabilities were measured by other choices. Finally, still other choices were used to test the model. The model predicted substantially better than chance. Another model, which assumes that subjects choose so as to maximize expected utility, failed to predict choices. A third model, which uses only the concept of subjective probability, predicted as well as the subjectively expected utility maximization model. It is concluded that the subjectively expected utility maximization model accounts for the results of this experiment, and that subjective probabilities are much more important than utilities in determining choices among bets like those used in this experiment.
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