Is human life worth peanuts? Risk attitude changes in accordance with varying stakes

Risk aversion is well-known as a general and robust characteristic of people’s decision making: people are less likely to gamble when they are unsure if they will obtain the expected value of the bet made. The “peanuts effect” is, however, an exception to this general rule. The “peanuts effect,” which states that people are more willing to gamble when playing for “peanuts” (a small outcome), has been stably observed in the context of a small monetary stake. We conducted two types of experiments to verify whether the peanuts effect still occurred when the type of stakes changed. We had two main findings. On the one hand, people tended to gamble more for a qualitatively smaller value when the stake was material in nature, meaning that the “peanuts effect” occurred with a qualitatively low stake. On the other hand, people were willing to take a risk for a qualitatively larger value when the stake was a human life: this is the opposite phenomenon of the “peanuts effect.”