Investment (Cash-Out) Game

Goal: The goal of this experiment is to study how people respond to the arrival of new information after they have already made an investment decision and are considering whether to pull out their investment or not.

Story: Subjects receive a $15 endowment and have to decide how much of their $15 endowment to invest in a lemonade stand. The lemonade stand can operate for up to 10 days, in groups of 5 days at a time. For the lemonade stand to be successful, in some Rounds, at least 5 of the days it operates have to be sunny. In other Rounds, at least 6 of the days it operates have to be sunny. Subjects know the minimum number of sunny days they need for success at the start of a Round before they make any decisions.


Investment stage: subjects decide how much to invest. They need to type number next to “Investment Amount”, which automatically changes the number next to “Possible Return”.

Selecting the days: Subject selected the days to operate lemonade stand (open lock symbols represent 5 days that subject commits to operate lemonade stand).

Weather on selected days: Subject observes weather forecast for selected days and gets cash-out offer to sell the lemonade stand.

Rejecting the offer: Subject selects 5 more days in which he/she commits to operate the lemonade stand.

Summary page: After selecting last 5 days subject sees the summary of the game. If subject accepted the offer from above then previous stage is removed and subject sees the summary page with respective modification.

 

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