Please read these instructions carefully. "If you correctly answer three qualification questions and complete this study you will additionally receive a fixed bonus of $1.50.
In this study, there are various lotteries with different probabilities of winning. An example is:
|
With probability 5%: Get $ 18 With probability 95%: Get $ 0 |
The lotteries will actually be played out by the computer and determine your earnings in exactly the way we describe on the following pages.
You will be asked to choose which of two payment options you prefer: a lottery or a payment that you would receive with certainty. For the lottery displayed above, for example, you would be asked the following list of questions:
| Question # | Option A | Option B | ||
| 1 | Would you rather have: |
With probability 5 % :
Get
$18
With probability 95 %: Get $0 |
or | $0.01 with certainty |
| 2 | Would you rather have: | or | $0.02 with certainty | |
| 3 | Would you rather have: | or | $0.03 with certainty | |
| ... | ... | ... | ... | |
| 1,799 | Would you rather have: | or | $17.99 with certainty | |
| 1,800 | Would you rather have: | or | $18.00 with certainty |
In each question you pick either Option A (the lottery) or Option B (the certain payment). We will randomly pick one question and pay you according to what you chose on that one question. Each question is equally likely to be chosen for payment.
We assume that you prefer the lottery (Option A) when the certain payment in Option B is very small, but that you switch to preferring Option B when the certain payment is very large. Therefore, to save time, we will not actually ask you 1,800 questions. Instead, we will simply ask you to state the amount at which you would switch from Option A to B in the table. This is the same as asking you:
Which certain payment is worth as much to you as this lottery?
Based on your response to this question, we can then fill out your answers to all 1,800 questions in the list. That is, you will choose Option A for all questions with a lower certain payment than your response, and Option B for all questions with a certain payment that is at least as high as your response.
Example: Suppose you were to tell us that a given lottery is worth as much to you as a certain payment of $12. Then this would mean that you prefer the lottery over any certain payment that is smaller than $12. On the other hand, it would also mean that you prefer any certain payment greater than $12 over the lottery.