{% extends "global/Page.html" %} {% load otree static %} {% block title %} Instruction {% endblock %} {% block scripts %} {% endblock %} {% block styles %} {% endblock %} {% block content %}

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Welcome to the experiment. Please read these instructions carefully. There will be a quiz around the end of the instructions, to make sure you understand this experiment. The payment you will receive from this experiment depends on your decisions.

Your Role and Match


At the beginning of the experiment, one-half of the participants will be randomly assigned to the role of a seller and the other half the role of a buyer. Your role will remain fixed throughout the experiment.

The experiment consists of 10 matches. At the beginning of each match, one seller participant and one buyer participant are randomly paired. The pair is fixed within the match. After each match, participants will be reshuffled to form new pairs. You will not learn the identity of the participant you are paired with, nor will that participant learn your identity even after the end of the experiment.

In this experiment, there is a seller who has an asset with no value and a buyer who values the asset positively. The buyer’s value of the asset is represented by B. At the start of each match, the computer randomly selects B from the set { {{ low_value_display }}, {{ vm_display }}, {{ high_value_display }} }, where each value is equally likely to be chosen. B is fixed for each match but is independently selected for each new match. Importantly, The buyer knows the value B, but the seller does not.


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Your Decisions in Each Match


Each match consists of up to two rounds of bargaining. In Round 1, a seller offers a price to sell the asset, and the buyer responds. If the offer is rejected, the match may move on to Round 2 of bargaining. The details follow.

Your Task as a Seller in Round 1:

Suppose your role is a seller. At the beginning of Round 1, you will see the following figure. Three blue bars between {{ low_value_display }} and {{ high_value_display }} represent the possible values of B.

0
{{ low_value_display }}
{{ if low_price_enabled }}
{{ endif }}
{{ if low_price_enabled }}
Make price offer
p = {{ low_offer_display }}
{{ endif }}
Make price offer
p = {{ middle_offer_display }}
Make price offer
p = {{ high_offer_display }}
{{ low_value_display }}
{{ vm_display }}
{{ high_value_display }}
{{ high_value_display }}

Figure 1: Seller's Screen: Round 1

Choose your price offer by clicking one of the {{ if low_price_enabled }}three{{ else }}two{{ endif }} buttons: {{ if low_price_enabled }}“Make price offer p = {{ low_offer_display }}”, {{ endif }}“Make price offer p = {{ middle_offer_display }}”, and “Make price offer p = {{ high_offer_display }}”. After that, click the submit button, and wait for the buyer’s decision. You expect {{ if outside_option_enabled }}one of three{{ else }}one of two{{ endif }} possible outcomes.

When the buyer {{ if outside_option_enabled }}accepts the offer or takes an outside option{{ else }}accepts the offer{{ endif }}, the buyer’s decision will be correctly carried with a 99.9% chance. With a 0.1% chance (1 in 1,000), however, a server computer overrides the buyer’s decision and rejects the offer. This minuscule probability is merely introduced to preserve a theoretical possibility of reaching Round 2. Since this probability is negligible, overriding is unlikely to happen in the course of your participation.


Your Task as a Buyer in Round 1:

Suppose your role is a buyer. At the beginning of Round 1, you will see the following figure. The horizontal position of the blue bar represents B, your value of

p
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{{ low_value_display }}
Seller's price offer
p
Your value: {{ vm_display }}
{{ high_value_display }}

Figure 2: Buyer's Screen in Each Round

the asset. (B is {{ vm_display }} in this example, but your value can be {{ low_value_display }} or {{ high_value_display }} as well.) Once the seller in your pair offers a price, p, a red vertical arrow will appear on the figure. The position of the red arrow represents p. After that, decide whether to

Beware that you cannot accept the offered price p if it is strictly greater than your value B, otherwise your payoff becomes negative. When you {{ if outside_option_enabled }}accept the offer or take an outside option{{ else }}accept the offer{{ endif }}, your decision will be correctly carried with a 99.9% chance. With a 0.1% chance (1 in 1,000), however, a server computer overrides your decision and rejects the offer. This minuscule probability is merely introduced to preserve a theoretical possibility of reaching Round 2. Since this probability is negligible, overriding is unlikely to happen in the course of your participation.


  Figure 3: Spinning Wheel


Transition to Round 2:

As described, when bargaining does not end in Round 1, the match continues to Round 2 with an 90% chance. Your screen presents a spinning wheel that consists of red area (10%) and green area (90%) as illustrated below. Once you click the “Spin” button, the wheel starts spinning. If the spinning wheel stops at the green area, the match continues. Otherwise, the match terminates. Note that the seller and buyer in the same match always see the same outcome from the wheel for each round.

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Your Task as a Seller in Round 2:

Before submitting a new price offer, report how you believe the buyer’s value, by filling out the following sentence.

I believe that the value of the buyer paired in this match is

The last number will be automatically filled out once you input the first two numbers so that those three numbers sum up to 100. The reported probabilities will appear in your decision screen but will not be shared with the buyer.

Its sole objective is to help you think about an appropriate price offer. It is important to note that there are no advantages to indicating probabilities that differ from your true belief, so please report your belief as accurately as possible.

Note that the buyer’s value of the asset (B) {{ if outside_option_enabled }}and the value of the outside option (50 tokens){{ endif }} will remain the same across rounds within a match.


Your Task as a Buyer in Round 2:

Your screen will present the same figure as the one you had in Round 1 that indicates your value B. Once the seller in your pair makes a price offer in Round 2, a red vertical arrow will appear on the figure. The position of the red arrow represents p. After that, decide whether to

Beware that the match will be over at the end of Round 2



Information Feedback




Your Monetary Payments


At the end of the experiment, a computer will randomly select one match out of 10 for your payment. Every match has an equal chance to be selected for your payment, so it is in your best interest to take each match equally seriously. Participants will receive the amounts of tokens according to the outcome from the selected match with the exchange rate of 1 token = 1 HKD. Also, every participant will receive a show-up fee of HKD 40.


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A Practice Match

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#} {# The practice match is part of the instructions and is not relevant to your payment. Its objective#} {# is to get you familiar with the computer interface and the flow of the decisions in each round of a#} {# match. Once the practice match is over, the computer will tell you, "The official matches begin now!"#} {#

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Completion of the Experiment

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#} {# After the 10th match, the experiment will be over. You will be instructed to fill in the receipt for your#} {# payment. The amount you earn will be paid electronically via the HKUST Autopay System to the bank account#} {# you provide to the Student Information System (SIS). The Finance Office of HKUST will arrange the auto-payment.#} {# An email notification will be sent to your HKUST email address on the pay date under the name of the sender "FOPSAP"#} {# (Finance Ofiice Payment System Auto Payment).#} {#

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Comprehension Check

To ensure your comprehension of the instructions, you will answer four multiple-choice questions. You can proceed only with all correct answers. Afterwards, you will participate in a practice match.


Question 1
{% formfield player.q1 label="Suppose you are a seller. Which of the followings is NOT TRUE?"%}
  • In each match, the buyer’s value of the asset is the private information of the buyer.
    • {{ if outside_option_enabled }}
  • If the buyer takes the outside option, the buyer receives 50 tokens, and the seller receives 0 tokens.
    • {{ endif }}
  • If the buyer accepts the offer p from the seller, the seller receives p tokens.
  • If the buyer rejects the seller’s offer, with a 10% chance the match terminates, and with an 90% chance the match moves on to the next round.
  • In case that the match moves on to the next round, the seller makes a new offer.
Question 2
{% formfield player.q2 label=q2_label %}
  • If the buyer whose asset value is B accepts a price offer p, he earns (B - p) tokens.
    • {{ if outside_option_enabled }}
  • If the buyer takes the outside option, the buyer receives 50 tokens, and the seller receives 0 tokens.
    • {{ endif }}
  • The buyer’s value of the asset is fixed within each match and does not vary across rounds.
  • If the buyer rejects the seller’s offer, with a 10% chance the match terminates, and with an 90% chance the match moves on to the next round.
  • In case that the match moves on to the next round, the seller makes a new offer.
Question 3
{% formfield player.q3 label="Suppose the price offer in Round 1 is rejected. Which of the followings CAN HAPPEN?"%}
  • If the buyer rejects the seller’s offer, with a 10% chance the match terminates, and with an 90% chance the match moves on to the next round.
  • When the match terminates, both the seller and the buyer receive 0 tokens.
Question 4
{% formfield player.q4 label="Suppose the first match is done. Which of the followings is TRUE?"%}
  • Your role is randomly determined at the beginning of the experiment and fixed throughout the experiment.
  • In each match, one seller participant and one buyer participant are randomly paired. After each match, participants are reshuffled to form new pairs.
  • For each match, the buyer’s value of the asset is randomly determined, but the value is fixed within the match.
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