I wonder if what appears to be small-stakes risk aversion can be explained
as avoidance of the cost of making budget ajustments. If you win a bet,
you have to decide what to do with the money, and if you lose you have to
figure out where the money is going to come from (i.e., what purchases to
forgo). This process can have non-trivial costs, especially if you can't
make the decisions yourself and have to negotiate the budget with someone
else, for example a spouse.
A possible additional explanation is that when someone is offered a bet
with a stated probability of winning, especially one that has a positive
expected payoff, he mentally adjusts it downward to take into account the
possibility that he is being conned.
