{% extends "global/Page.html" %} {% load otree static %} {% block title %} Instruction {% endblock %} {% block scripts %} {% endblock %} {% block styles %} {% endblock %} {% block content %} {% if read == 1 %} {% endif %}

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Tab 1#} {#

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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 {{ tot_matches }} 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 each match, the seller holds an asset. The value of the asset is 0 for the seller. However, the buyer has a strictly positive value of the asset. Let B denote the buyer's value of the asset. At the beginning of a match, a computer randomly and independently draws B between 50 and 400. Every integer in [50, 400] has an equal chance to be drawn. The value B is fixed within each match, and a new B is independently drawn for a new match. The buyer knows the value B, but the seller does not.


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Tab 2

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Your Decisions in Each Match


Each match consists of at least one round of bargaining. In a round, a seller offers a price to sell the asset, and the buyer responds. If the offer is rejected, the match may move on to the next round of bargaining. The details follow.

Your Task as a Buyer:

Suppose your role is a buyer. At the beginning of Round 1, you will see the following figure. The horizontal position of the dark blue line represents B, your value of the asset. (B is 330 in this example, but your value will vary.) Once the seller in your pair makes a price offer, p, a red vertical arrow will appear on the figure. The position of the red arrow represents p. After that, decide whether to

0
50
Seller's Offer:
p
Value B:
330
400

Figure 1: Buyer's Screen in Each Round

Your task is the same for every round. It is important to understand that when you reject the offer, there is a 20% chance that the match is terminated, and both of you and the seller in your pair earn 0 tokens.

Beware that you cannot accept the offered price p if it is strictly greater than your value B, otherwise your payoff becomes negative.


Your Task as a Seller:

Suppose your role is a seller. At the beginning of Round 1, you will see the following figure. The blue shaded area between 50 and 400 represents the range of all possible buyer's values.

p
0
50
Your Price Offer in this Round
400

Figure 2: Seller's Screen: Round 1

Choose your price offer by clicking on the line. A red vertical arrow, whose position represents your price offer, p, will move to the point you click. You are free to choose any point in the range [0, 400] for your price offer, and you can adjust it as much as you wish. After that, click the submit button, and wait for the buyer's decision. You expect one of {% if outside_option > 0 %}three {% endif %}{% if outside_option == 0 %}two {% endif %} possible outcomes.

If the match moves to Round 2 and beyond, then you will see the following figure below. The red vertical arrow represents your (rejected) previous offer.

Before submitting a new offer price, adjust an orange slider and a purple slider to indicate the updated range of possible values B in your mind. The reported range 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. There is nothing to gain by indicating a range that differs from what you actually believe, so please report your belief as accurately as possible. To indicate the range, move the orange and purple sliders.

p
0
50
Min: 50
Max: 400
Your previous offer
400

(a) Before

p
0
50
Min: 90
Max: 330
Your previous offer
400

(b) After

Figure 3: Reporting Beliefs in Round n

The horizontal positions of the sliders respectively represent the minimum and the maximum of the range in your mind. The minimum can't exceed the maximum.

Note that the buyer's value of the asset (B) {% if outside_option > 0 %} and the value of the outside option ({{ outside_option }} tokens) {% endif %} will remain the same across rounds within a match.



Probability of Match Termination

As described, after a buyer rejected a price offer, the match continues to the next round with 80% chance. Your screen presents a spinning wheel that consists of red area (20%) and green area (80%) 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.


  Figure 4: Spinning Wheel

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Round > 1 > 2 > 3 > 4 > 5> 6 > 7 > 8
Probability 80% 64% 51% 41% 33%26% 21% < 20%
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#} {# The table reads, for example, that the probability that the match goes beyond round 2 is 64%, while#} {# the probability that the match goes beyond round 8 is less than 20%.#} {#

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Information Feedback



Your Monetary Payments


At the end of the experiment, a computer will randomly select one match out of {{ tot_matches }} 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 > 0 %}
  • If the buyer takes the outside option, the buyer receives {{ outside_option }} 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 20% chance the match terminates, and with an 80% chance the match moves on to the next round.
  • {% if outside_option == 0 %}
  • In case that the match moves on to the next round, the seller makes a new offer.
  • {% endif %}
Question 2
{% formfield player.q2 label = "Suppose you are a buyer, and the value of the asset is 300. Which of the followings is TRUE?" %}
  • If the buyer whose asset value is B accepts a price offer p, he earns (B-p) tokens.
  • {% if outside_option > 0 %}
  • If the buyer takes the outside option, the buyer receives {{ outside_option }} 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 outside_option == 0 %}
  • If the buyer rejects the seller’s offer, with a 20% chance the match terminates, and with an 80% 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.
  • {% endif %}
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 20% chance the match terminates, and with an 80% 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 receiver 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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