PHD CANDIDATE IN ECONOMICS, PENNSYLVANIA STATE UNIVERSITY
Goal: To investigate the possibility of collaboration and potential dynamics among two players. Are high ability players willing to sacrifice their reputation to enhance cooperation?
Story: Subjects need to accumulate as many tokens as possible. In every game, they are matched with the pre-programmed computer, which has an either high or low type. The game consisted of up to 5 rounds. In the first four rounds, subjects decide to cooperate with the computer or not. In the fifth round, subjects need to commit to cooperation or free riding for the rest of the game.
Decision 1: Subject is endowed with 2 tokens. She/he need to decide to spend 2 tokens and work or keep 2 tokens and not work by clicking respective button. Let’s select “work”.
Decision 2: If subject works, there is 60% chance of finding 10 tokens and 40% chance of finding 0 tokens. In this example subject was successful. Second decision is to pay the fee to guarantee that the computer moves in the next stage or not. Let’s select “pay”.
Outcome of the computer: After confirming the choice from previous screenshot (choice cannot be changed), subject observes if computer also found the tokens or not and he/she updates her/his belief about the computers ability.
All those stages are repeated at most 4 times, depending if a subject or computer found the tokens.
Round 5 (Commitment round): If computer reaches round 5 she/he need to commit to one of the strategies that will be applied for the rest of the game automatically.
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.