Complexity aversion in risky choices and valuations: Moderators and possible causes

In the age of digitalization and globalization, an abundance of information is available, and our decision environments have become increasingly complex. However, it remains unclear under what circumstances complexity affects risk taking. In two experiments with monetary lotteries (one with a stratified national sample), we investigate behavioral effects and provide a cognitive explanation for the impact of complexity on risk taking. Results show that complexity, defined as the number of possible outcomes of a risky lottery, decreased the choice probability of an option but had a smaller and less consistent effect when evaluating lotteries independently. Importantly, choices of participants who spent more time looking at the complex option were less affected by complexity. A tendency to avoid cognitive effort can explain these effects, as the effort associated with evaluating the complex option can be sidestepped in choice tasks, but less so in valuation tasks. Further, the effect of complexity on valuations was influenced by individual differences in cognitive ability, such that people with higher cognitive ability showed less complexity aversion. Together, the results show that the impact of complexity on risk taking depends on both, decision format and individual differences and we discuss cognitive processes that could give rise to these effects.