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We consider a new approach to power control in decentralized wireless networks, termed fractional power control (FPC). Transmission power is chosen as the current channel quality raised to an exponent -s, where s is a constant between 0 and 1. The choices s = 1 and s = 0 correspond to the familiar cases of channel inversion and constant power transmission, respectively. Choosing s isin (0,1) allows all intermediate policies between these two extremes to be evaluated, and we see that usually neither extreme is ideal. We derive closed-form approximations for the outage probability relative to a target SINR in a decentralized (ad hoc or unlicensed) network as well as for the resulting transmission capacity, which is the number of users/m2 that can achieve this SINR on average. Using these approximations, which are quite accurate over typical system parameter values, we prove that using an exponent of s* = 1/2 minimizes the outage probability, meaning that the inverse square root of the channel strength is a sensible transmit power scaling for networks with a relatively low density of interferers. We also show numerically that this choice of s is robust to a wide range of variations in the network parameters. Intuitively, s* = 1/2 balances between helping disadvantaged users while making sure they do not flood the network with interference.