The purpose of this session is to study how people make decisions in a particular situation.
If you have any questions, feel free to raise your hand and a monitor will assist you.
From now until the end of the session, unauthorized communication of any nature with other participants is prohibited.
During the session you will play 100 rounds of a game from which you can earn tokens.
At the end of all the games, the tokens you earn will be converted into dollars;
the more tokens you earn, the more money you will make.
Description of the game
At the beginning of each round of the game, you are given a credit of 150 tokens.
You must then decide whether to Take the risk or Take the cost.
If your decision is to Take the risk, there is some probability of incurring a Loss of 100 tokens.
If your decision is to Take the Cost, you incur a Cost of 75 tokens for certain.
Your Profit depends on your decision and on whether the Loss occurs.
If you Take the risk, then either
Your Profit = 150-100 = 50 tokens if the Loss occurs or
Your Profit = 150 tokens if the Loss does not occur.
If you Take the Cost, then
Your Profit = 150 - 75 = 75 tokens regardless of whether the Loss occurs or not.
The Probability of Loss varies from round-to-round.
To determine whether the Loss actually occurs in a round, the computer will generate a random number between 0 and 1, with each number in this range equally likely.
If the random number is below or equal to the Loss Probability for that round, the Loss occurs;
if it is above the Loss probability, the Loss does not occur.
For example, suppose the Loss Probability for the round is 0.60.
If the random number comes out to be 0.65, the Loss does not occur.
If the random number comes out to be 0.4, the Loss occurs.
Each round the bot will give you Advice of whether to Take the Cost or Take the risk.
The Advice has been determined in a way that on average, if you follow the Advice you will earn the most money possible.
You are not required to follow the advice.
Note that the Advice does not guarantee that you will make the most money possible in any given round.
It is possible that when the advice is Take the risk, the Loss does occur.
It is also possible that the Advice is to Take the Cost, and the Loss does not occur.
Payment
At the end of the session the actual earnings from all 100 rounds will be converted to Singapore dollars at the rate of 1000 tokens for 1 SGD.
These profits will be displayed on your screen and paid to you in cash, along with the $5 participation fee, at the end of the session.