7. Individual Choice Beliefs and Behavior In many experimental studies it has been found that increasing the level of rewards while not always significantly improving average support for the predictive hypothesis nevertheless reduces the variance of the observations around the predicted outcome. Smith and Walker model the decision as maximizing the expected utility of the reward where the subjective cognitive cost of effort is increasing in the accuracy of the decision. Consequently increasing payoffs induces more costly effort and reduces the error variance relative to the prediction. In a second entry they apply this model to the first price auction decision format to examine the effect of payoff levels and experience on bidding behavior. The payoffs vary from zero to 20 times the normal amounts paid to subjects in first price auction experiments. Both payoff level and experience reduce the volatility of bids relative to assigned value: the standard error around the fitted bid function decreases with these two treatment control variables.