Project Final Draft
Economics 465
May 20, 2011
Gordon Atkins and Charlie Romero
Introduction:
Individuals below the poverty line have been shown to be more likely to engage in
activities that reduce their future earnings. There exists a large body of prior literature which
provides evidence of correlations between the poor and economically inefficient behavior, most
notably summarized by Karelis (2007) to include the poor’s greater propensity to not work, not
stay in school, not drink alcohol in moderation, not abide by laws, and not save money. While
these observed correlations do not necessarily imply causation, data linking individuals below
the poverty line to behavior that perpetuates their poverty is very clear (see i.e. U.S. bureau of
the Census, 2000 data). Conventional explanations of this phenomenon are derived from one of
two important presumptions: the poor are either “rational” and suffer from “restricted
opportunity,” “flawed character” (Schiller 1976) or disincentives created by ineffective public
policies, or the poor are simply acting contrary to “homo-economicus.” Karelis (2007)
persuasively exposes each of the above “rational” explanations as flawed by citing surveys in
which the poor themselves do not consider a lack of opportunities to work as the reason for their
lack of work, the vast majority of poor and nonpoor consider the poor to have the same “moral
values” as the nonpoor, and instances of poverty-perpetuating behavior in societies that do not
suffer from creating perverse incentives for the poor to work. While there is no shortage of
theories for the poor’s risk-seeking behavior being the consequence of acting contrary to “homoeconomicus,” we seek evidence supporting a new theory explaining the cause of poverty: the
poor’s risk-seeking behavior is in fact “homo-economicus,” instead it is our neo-classical
[marginal] utility curve that needs to be changed for consumption of relief goods.
1
This above hypothesis challenges the widely accepted belief that marginal utility attained
from goods—income, for instance—decreases as more of the good is consumed. This notion
implies that goods are valued most by those who have the least. Correspondingly, the poor
should stand to gain the most from an increase in income because their consumption of an
additional dollar will result, ceteris paribus, in the attainment of greater marginal utility than if a
nonpoor individual consumes the same dollar. However, this supposes that any “good” provides
an increase in pleasure and does not account for the same “good” instead making a negative
situation less bad. While we maintain that decreasing marginal utility will occur in the former
scenario, we hypothesize that marginal utility is instead increasing when consumption of a good
relieves pain (see Figure B). Consequently, the marginal utility of a given good will depend not
only on how much it has been consumed already, but also on whether the individuals consuming
it are above or below a certain level of sufficiency (see Figure A). Of most relevance is whether
the subject is in a negative state of absolute utility1 (in which misery would need to be relieved)
or a positive state of absolute utility2 (in which pleasure would be increased). This theory that
goods provide increasing marginal utility below a level of sufficiency would be akin to a hungry
individual3 forgoing one bite of food for an unfair chance of consuming nine bites of food—it
would seem that nearly eliminating one’s hunger would be more than nine times as valuable as
just marginally reducing it. Of course, the plural of “anecdote” is not data, and thus our project
seeks to find evidence for the following hypothesis: below a certain threshold of sufficiency,
individuals are risk-seeking in pursuit of relief goods.4
1
Defined as below a neutral level of sufficiency.
Defined as above a neutral level of sufficiency.
3
Defined as needing 10 bites of food for hunger to reach a neutral level.
4
Upon reaching sufficiency, utility functions reach an inflection point and utility function resorts back to the widely
accepted decreasing marginal utility curve. This has already been studied extensively.
2
2
The results of the above hypothesis are important not only because they could redefine
the parameters of the utility curve,5 but also because this information would be a plausible
alternative explanation of extended poverty and the decisions of the poor that otherwise seem
irrational.6 Presuming that those below a given income of sufficiency (for argument’s sake, the
poverty line) are in a state of misery, their marginal utility would be increasing up to a neutral
level point of sufficiency. However, if our hypothesis proves correct and the marginal utility of
the poor is increasing, we would be able to shed light on the motives behind the behavior of
impoverished individuals: while the poor’s statistical tendencies to stay out of the workforce,
drop out of school, and engage in similar behavior reduces their expected future income, our
revision of the marginal utility curve explains how these individuals—who are presumably
below a level of sufficiency—are actually acting rationally as they pursue such risk-seeking
behavior. With a better understanding of why the poor behave the way they do, society will be
able to implement policies that more effectively reduce poverty. One example would be that
transfers increasing the incomes of the poor would theoretically increase the marginal utility of
an added dollar, thus increasing poor individuals’ incentive to work and further supporting a
positive cycle towards sufficiency.
Up to this point, not a lot of academic or experimental research has been done
surrounding the concept of increasing marginal utility. It was first hypothesized by Friedman and
Savage (1948) in an attempt to explain why individuals consume both insurance and lottery
tickets. Essentially, the utility function provided by income is concave until a certain point at
which it shifts to be convex; after a certain point, it then shifts back to concave for any point
Necessitating that the context of subjects’ overall well-being—whether above or below a neutral level of
sufficiency—be taken into account
6
Defined as decisions which do not maximize expected utilities.
5
3
thereafter. Friedman and Savage provided this explanation without ruling out other potential
explanations of this phenomenon,7 and without relating inflection points to levels of
consumption.
Karelis (2007) has most notably made the argument that marginal utility is increasing
below a neutral level of sufficiency, although there has not yet been any experimental data
supporting this idea. Karelis’ treatment of goods as either relievers (helping those below a level
of sufficiency) or pleasers (above level of sufficiency) will prove instrumental in our
explanations for how the nature of a good (and its consequent utility curve) can change
depending on each individual’s status quo.
Kahneman and Tversky (1979) find experimental evidence which suggests that
individuals are risk averse in the positive domain and risk seeking in the negative domain and
propose “prospect theory” as an explanation. The positive and negative “domains” are defined as
above and below a neutral asset level, but this level is merely defined as one that individuals
have adapted to. As suggested by experimental data from Ericson and Fuster (2009), individuals
tend to constantly and quickly adapt, meaning that attaining goods take individuals into the
positive domain (where they will be risk averse) and losing goods take individuals into the
negative domain (where they will be risk seeking).
While Kahneman and Tversky similarly acknowledge that a neutral level of wealth is the
inflection point for utility curves, their analysis differs from ours given their assumption that
individuals are risk averse when evaluating consumption of all goods. If our hypothesis is
correct, a level of sufficiency is not defined by continuous adaptation but is instead an absolute
7
For instance that another appeal of gambling could be the fun and suspense; or alternatively, that such risk-loving
is in fact irrational.
4
level below which all individuals are uncomfortable. Franken, Georgieva and Muris (2006)
provide additional experimental evidence that subjects who “have-not” are more likely that those
“have” to exhibit risk-seeking behavior. However, their explanation for this is related to the
effects of prior gains and losses in a gambling task create a moving reference point, rather than
an absolute level of sufficiency. This idea of a critical level of income is similarly explored by
Kwang (1965) in his explanation of why individuals buy lottery tickets. Kwang argues that the
“indivisibility” of certain expenditures that a subject could otherwise not afford (i.e. a college
education, a home for shelter, etc.)8 can render gambling a rational choice given constraints of
utility maximization. Although Kwang maintains that his conclusion is consistent with
decreasing marginal utility, it would be similarly valid given our hypothesis of increasing
marginal utility of relief goods.9
The concept of the increasing utility curve is further illustrated by Scholer, Zou, Fujita,
Stroessner, and Higgins (2010) who reinforce the idea that risk-seeking is more likely when the
individual is in a “state of loss.” Although this “state of loss” is also in reference to a malleable
reference point, the results point to evidence consistent with our absolute level of sufficiency.
The reasoning for this is that individuals are considered risk-averse in a positive domain because
their motivation to maximize their returns is less than their motivation to avoid failure. However,
if failure has already occurred (i.e. poverty has become their reality), then a fear of failure is
reduced. The poor, in a sense, have much less to lose. It should also be noted that Scholer, Zou,
Fujita, Stroessner, and Higgins (2010) also observed that if risky options were the only way to
You can’t purchase a percentage of an education or house. The choice is the entire thing or nothing.
It is important to note that there are two measures of well-being or utility—instantaneous and global (long term)—
we are measuring instantaneous levels to apply to systematic (below the poverty line). Nonetheless we find that
hypothetical data on instantaneous preferences will be applicable on systematic level because it deals with relief
goods.
8
9
5
return to neutral level, individuals in a negative state would be risk-seeking; however, if both
risky and conservative options presented opportunities to return to a neutral level, individuals
would be risk neutral—in other words, they would be indifferent to choices with the same
expected value. We expect the same to hold true within our experiments, largely because we
maintain that the utility curve’s point of inflection (where it shifts back to decreasing marginal
utility) is at the neutral level of sufficiency.
The concept that individuals tend to be risk-averse is illustrated by Holt and Laury
(2002). Their study shows that individuals become even more risk-averse as the stakes increase.
However, we do not feel obliged to control for individuals’ natural tendency towards riskaversion in our experiment because if subjects in our experiment nonetheless make risk-seeking
decisions, we can be even more confident that their utility curve is sloped differently for choices
involving pain relief. Furthermore, Holt and Laury’s finding that subjects given merely
hypothetical choices cannot accurately predict their behavior reinforces the importance of having
subjects make decisions based off of choices with real consequences.
6
Should our hypothesis be correct, the utility curve would be redefined as follows:
Figure A
Figure B
Figure B
7
3. Experimental Design:
3.1 Pre-Trial Organization
The goal of the experiment is to test whether individuals consuming goods below a level
of sufficiency are risk-seeking in pursuit of relief. In order to adequately test this hypothesis, a
sample of approximately two hundred Williams College students is necessary. All subjects will
be assigned a specific ten minute time slot to report to the experiment, and will be notified via
email. Subjects are to be brought from a waiting room into the experiment room and asked to
not discuss the results with other participants upon the conclusion of the trial. The experiment
room is concealed from the waiting room, preventing those waiting from observing the
experiment. The procedure is expected to last about ten minutes, and the subjects are to be
compensated following the completion study. One out of every twenty subjects will be
compensated twenty dollars at random, under the condition that the subject completes the entire
experiment. The winning subjects will be individually notified by email and asked to pick up
their earnings at a predetermined location.
Once the subjects arrive, they are advised that they will undergo short, painful
experiences, but that there are no major health risks. Subjects are informed of the compensation
format and told that they can leave the experiment at any time, but reminded that only those who
complete the entire experiment will be eligible for payment.
8
3.2 Pain Familiarization Stage
Before each subject enters, both water containers will be emptied and refilled with clean
water to ensure cleanliness. In addition, a new layer of ice is added to the cold water to remain a
temperature of approximately fourteen degrees centigrade for all trials. Fourteen degrees is
consistent with Kahneman et al. (1993) and the duration of hand immersion falls within the range
from this experiment. At the start of the experiment, all subjects will immerse their right hand to
the wrist in the container of very cold water for one minute. Once the subjects place their hand in
the container, they will be presented with two options for how they wish to spend the remaining
five minutes. After the one minute period is over, the subjects will remove their hand from the
container and will be given a one minute period to dry their hand in order to reduce the effects of
numbing. The pain familiarization stage is integral to the decision-making process as it gives the
subjects an opportunity to better calculate the value of each good. If the subjects did not undergo
this initial submersion, uncertainty would largely factor into subject choices. Further, since the
immersion is the exact same length as additional intervals, subjects experience less cognitive
overload when attempting to compare the options.
3.3 Subject Decision
By the end of this one minute rest period, the subjects will be asked to choose one of the
following options:
Option I (2 Minutes of Guaranteed Pain) Upon the completion of the minute, the subject puts
their left hand to wrist in very cold water for one minute. Immediately following this interval,
the subject places their right hand to wrist in very cold water for one minute. Immediately
following this interval, the participant’s left hand to wrist will be placed in room temperature
9
water. For the final minute, the participant’s right hand to wrist will be placed in room
temperature water.
Option II (Opportunity for Relief) If they subject chooses Option II, the subject flips a coin,
where heads yields Option A and tails yields Option B.
Option A requires the participant to put the left hand to wrist in very cold water for one minute.
Immediately after, the participant’s right hand to wrist will be placed in very cold water.
Following this interval, the participant’s left hand to wrist will be placed in very cold water for
one minute. For the final minute, the participant’s right hand to wrist will be placed in room
temperature water.
Option B requires the participant to put their left hand to wrist in very cold water for one minute.
Immediately after, the participant will then put their right hand to wrist in room temperature
water for an additional minute. Following this interval, the participant’s left hand to wrist will be
placed in room temperature water for one minute. For the final minute, the participant’s right
hand to wrist will be placed in room temperature water. In order to avoid the peak/end rule, both
Table A
Option
Time
Hand/Temperature
Option I
Minute 1
Left in Cold
Minute 2
Right in Cold
Minute 3
Left in Warm
Minute 4
Right in Warm
Minute 1
Left in Cold
Minute 2
Right in Cold
Minute 3
Left in Cold
Minute 4
Right in Warm
Minute 1
Left in Cold
Minute 2
Right in Warm
Minute 3
Left in Warm
Minute 4
Right in Warm
Option II A (Heads)
Option II B (Tails)
10
Option I and Option II conclude with the same condition (right hand in warm water). Figure A
outlines the options presented to the participants.
It should be noted that during the fourth minute all options have the subject in lukewarm
water in order to control for the “Peak-End” rule (Kahneman et al., 1993). In other words, we did
not want to give subjects the option of ending under different conditions because their choices
would have presumably been biased by a preference for ending the experiment on a high note.
This phenomenon could even affect participants that are ex ante unaware of the “Peak-End” bias
and influence their decisions. Additionally, regardless of the option the subject chooses,
participants will all spend the exact same amount of time (six minutes) completing the study.
One potential flaw that could arise would be that relief from the task provides the subject with
free time. This leisure time could be used in a productive manner, and would incentivize the
subject to choose one option over the other. With this design, Option I and II are structured in
such a way that they both rule out the possibility of utilizing free time with regards to
productivity.
Option I is the “homo-economicus” prediction because subjects that have decreasing
marginal utility curves will value the certainty of an amount of relief more than a riskier
alternative with equivalent expected relief. Option II is the “homo-Karelis” prediction because
subjects that have increasing marginal utility curves will value the opportunity for increased
relief greater than the certainty of a smaller amount of relief.
3.3 Post-Decision Interview
After the subjects choose either Option I or Option II, the remaining four minutes are spent
asking the subjects a few questions about their decision. First, subjects are asked if they have
11
ever had experience with an ice bath (e.g. for post-competition athletic rehabilitation purposes),
which provides a metric for pain tolerance with this particular experience. Having experience is
especially important as allows participants to more accurately estimate the expected relief of
both options. Next, the subjects are asked to explain their decision-making process, providing
some rationale for electing Option I or Option II. This question helps to reveal motivations for
their decisions and can help identify evidence that either supports or rejects the hypothesis. It is
imperative that this interview takes place following the decision, as it could have primed the
subject and influenced their choice if it were conducted beforehand.
3.4 Pilot Summary Statistics
In the pilot study we were only able to collect data from seventeen Williams College students.
Thirteen of these students are enrolled in Economics 465, and the other four participants were
freshmen (all prospective Economics majors). Eleven of the subjects were male and six of the
subjects were female. The session lasted approximately three hours, with each trial lasting no
more than ten minutes. With a sample of roughly twenty students, only one of the subjects will
be paid twenty dollars for participating10.
10
All seventeen subjects completed the entire experiment.
12
5. Results:
Figure B presents the data collected from the pilot experiment.
Table B
Subject
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Gender
Male
Female
Female
Female
Male
Male
Male
Female
Female
Male
Male
Male
Male
Male
Female
Male
Male
Decision
II
II
I
I
II
II
I
I
II
I
II
I
II
II
II
II
II
Ice Bath
No
No
Yes
No
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Figure C examines subject decisions by selected characteristics:
Figure C
Subject Decisions
Number of Subjects
12
10
8
6
Flip
4
No Flip
2
0
Overall
Male
Female Ice Bath
13
No Ice
Bath
Table C reports summary statistics from the pilot experiment:
Table C
Condition
Percentage Option I
Percentage Option II
p-value for binomial
test
Overall (N=17)
.353
.647
0.166
Male (N=11)
.272
.727
0.112
Female (N=6)
.5
.5
0.655
Ice Bath (N=8)
.5
.5
0..637
No Ice Bath (N=9)
.333
.777
0.089
Figure C and Table C provide clear evidence that subjects are more likely to choose the
risk-seeking option. As seen in Figure C, there is large gap in subject decisions over a number of
characteristics, including both overall sample and subjects with ice bath experience. Table C
uses a two-sided binomial proportion test, where the null hypothesis is that subjects are
indifferent between the two options (HO = .5). It should be noted that a typical binomial test has
a sample size of roughly thirty (N=30) and there were only seventeen participants in the pilot
experiment. Nevertheless, there are several extrapolations that can be made from this data which
support our hypothesis.
In general, these results are suggestive of our hypothesis that individuals exhibit riskseeking behavior in pursuit of relief goods. Eleven out of the seventeen participants chose Option
II, the risk-seeking alternative. The “homo-economicus” assumption and null hypothesis is that
individuals prefer Option I, which supports the classical theory that expects agents to have
decreasing marginal utility curves. As Table C illustrates, a binomial test yields a p=0.166 value
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for the overall sample, which does not allow us to reject the null hypothesis at the 95% level that
individuals are risk averse. However, a much larger sample size would produce more definitive
conclusions, and as it stands, results from the pilot session generally support our hypothesis.
Perhaps the most telling result is from the cohort that has no prior experience with ice
baths. With a relative lack of experience compared to those who had ice bath experience, there
is a greater likelihood that this cohort miscalculated how much pain they would experience in
either option. For these subjects, immersing their hand in cold water for one minute was a more
novel experience and they were more noticeably affected by the cold temperature. This cohort
likely experienced more pain, or at least had a lower tolerance for this type of pain, and as a
result, was less willing to accept another two minutes of guaranteed pain (and more willing to
relieve the pain at any risk). Seven out of nine subjects elected the risk-seeking option, and the
p- value, 0.089, is strong evidence that subjects exhibit risk-seeking behavior in pursuit of relief
goods.
Additionally, there is some evidence that men are more risk-seeking than females. Males
chose Option II 72.7% of the time whereas women chose Option II 50% of the time. Again, with
a limited sample size (eleven males and six females), it is difficult to make any definitive
conclusions, but the results point towards a discrepancy in gender behavior. It should be noted
that this result, females are more risk-averse relative to men, is well-documented the literature of
behavioral economics. Croson and Gneezy (2009) examine gender differences in preferences
and find robust differences in risk, social and competitive preferences. The authors argue that
males and females have different affective reactions to risk, and also differ in their emotional
reactions to uncertain situations. Further, males tend to consider risky situations as a challenge,
15
rather than a threat, and this leads to higher risk tolerance in behavior. The interplay of two
factors, selection and learning, drives a great deal of the experiments examined in the study.
16
6. Discussion:
6.1 Internal Validity
There are several internal validity considerations that must be addressed in order to better
understand how our hypothesis fits within the context of the results. First off, it must be noted
that the experimental design could allow for some experimenter bias. While a script was used
provide all subjects with a consistent set of directions, the moderator’s dialogue or tone may
have been more conducive to one of the options. This could have created some unconscious bias
on the part of the experimenter that might have obscured or invalidated the results. Although
remarks from the post-decision interview do not suggest evidence of a link between
experimenter demand and risk averse (or risk-seeking) behavior, precautions could be taken to
avoid this problem. In future trials, this issue could easily be addressed as a moderator could be
paid to run the study, without knowing the purpose of the experiment.
In addition, it might be the case that the subjects who were negatively affected by the
cold temperature were unable to make a rational choice due to the pain. The subjects might not
have been able to accurately calculate the expected duration of pain because of cognitive
overload, and could have just randomly chosen one of the options. This would support the
conjecture that poor people are so focused on their impoverished state that they are unable to
make a rational decision. If this were the case, we would project that individuals with less
experience with ice baths would perceive the pain to be more intense and consequently make less
rational decisions. The binomial tests conducted, with the null hypothesis being subjects choose
randomly, suggest that this is not occurring.
Another important internal validity consideration is the composition of the subject pool:
all participants were Williams College students, and most (thirteen out of seventeen) are enrolled
17
in Econ 465 with the experimenters. This guarantees future encounters between the subjects and
experimenters, which may affect the decision that the subject makes. If the subject’s honest
preference is Option I (II) but does not want to seem risk averse (seeking) in the eyes of the
experimenter, the subject might choose the alternative option. The subject might believe that
electing Option I or II has negative or positive associations and this could outweigh what they
believe to be the rational decision. Further, Econ 465 students are well-versed in the field of
experimental economics and might be more interested in “figuring out” the experiment rather
than simply participating. If the subject believes that he/she knows the motivations of the
experiment, his/her decision could again not represent true preferences. It is quite possible that
the subjects could intuit what the experiment is intended to demonstrate and act accordingly. An
easy way to correct this potential issue would be to recruit a more diverse subject population and
use experimenters from different social circles.
Finally, there was a rather large portion of subjects, eight of seventeen, who have
experience with an ice bath. Those who had experience with ice baths did not show the same
level of discomfort and were likely more indifferent between the two options. Out of the four
subjects that had ice bath experience and also chose Option I, three subjects explicitly expressed
indifference between Options I & II in the post-decision interview. A discrepancy in familiarity
with the process caused the circumstances to differ between those had ice bath experience and
those who did not. Running several more trials would allow one to see if a statistically
significant difference exists between the two cohorts. One method to avoid this issue altogether
would be to change the task to something that fewer subjects have experienced. A rather large
portion (eight out of seventeen) of the subject pool has prior experience with an ice bath, which
could have effectively reduced the pain endured during the experiment. It is therefore
18
unsurprising that individuals who endured more pain (and had no ice bath experience) were more
likely to exhibit risk-seeking behavior to alleviate their painful experience.
6.2 External Validity
There are certainly some limitations with the degree to which the results can be
extrapolated to more universal settings. As mentioned earlier, the composition of the subject
pool limits the extent to which one can generalize the results. Typical Williams College students
come from affluent backgrounds, and are not representative of the population of interest:
poverty-stricken people. While the experiment artificially creates an instantaneous negative
situation for the subjects, the subjects have fundamentally different preferences than
impoverished people. It is quite possible that the convex utility curves with regards to pain relief
will not hold amongst the poor as inconsistent conditions will alter preferences. It would be
preferable to test subjects of all demographics and analyze discrepancies between certain
cohorts.
Along the same lines, there are some temporal issues that warrant consideration. A
subject in this experiment, regardless of whether they choose Option I or II, will be completely
relieved of pain following the conclusion of the experiment. Subjects are cognizant of this fact
and the stakes are relatively low when compared to impoverished people attempting to escape
poverty. When the subjects are required to make their decision, they have only been in this
painful state for one minute. On the other hand, many people spend years in poverty, and
preferences are shaped and influenced by a lifetime of experiences. We try to account for this
discrepancy by creating a reference point for subjects that is below an absolute neutral level of
sufficiency: given certainty, subjects will be subjected to two additional minutes of pain, and
19
even if they choose the risk-seeking option, they will unconditionally experience at least one
additional minute of pain. While it is extremely difficult to replicate a lifetime of poverty in a
laboratory setting, by making the pain last longer it would be possible to investigate the effects
of duration of a negative state on preferences.
In future trials, immersion times could be lengthened or shortened to determine how
duration in an impoverished state affects subject choices. For example, each subject could be
randomly assigned to one of three treatment groups. Group one would follow the same design as
the pilot experiment (i.e. 1 minute cold, followed by 1 minute rest, followed by 4 minutes of
either warm or cold). Subjects in group two would initially immerse their hands in water for
thirty seconds, to shorten the negative state that the subject endures. Following the thirty second
interval, the rest of the experiment would remain the same as the pilot study in order to maintain
consistency with the options. Lastly, subjects in group three would initially immerse their hands
in water for one minute and thirty seconds, to lengthen the negative state that the subject endures.
Following the ninety second interval, the rest of the experiment would remain the same as the
pilot study. If the differences between the studies were not statistically significant, we would be
able to more confidently rule out a temporal explanation for the results.
6.3 Lessons Learned
In subsequent trials, it would be beneficial to have a thermometer to maintain a consistent
temperature. Although there appears to be no trend in the results as the experiment progressed
that would be indicative of a temperature inconsistency, exact measurements would help the
internal validity of the experiment. We added a handful of ice after each trial in order to
maintain a thin layer of ice at the top of the container, but it is possible that the temperature
20
slightly changed over the course of the experiment. Kahneman et al (1993) found that even a
one degree change in temperature can affect the perception of painful experiences. However, an
examination of the data indicates that there were no such trends in the results as five out of the
first nine subjects chose Option II and six of the last eight subjects chose Option II. A two
proportion Z-test yields a value that is not statistically significant and we can rule out any
undesirable trends with the experiment.
The size of the container is another variable that could influence the decisions of the
subjects. The container we used was very large (two cubic feet), which allowed the subjects to
move their hands around freely in the water, potentially reducing the effects of the pain. In
future trials, a smaller container that limited hand mobility would create a more consistent
experience for all subjects.
21
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Riskseeking becomes a Motivational Necessity.” Journal of Personality and Social
Psychology, Vol 99(2), Aug 2010, 215-231.
Weber, Elke U., Blais, Ann-Renee and Betz, Nancy E., A Domain-Specific Risk-Attitude Scale:
Measuring Risk Perceptions and Risk Behaviors (2002). Journal of Behavioral Decision
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Appendix
Subject Instructions
Good evening. Thank you for attending our study. We appreciate your participation. The
experiment will take no more than ten minutes and you can leave at any time. You might
experience some discomfort, but we assure you that there are no major health risks with
completing any of the tasks. You have a 5% chance of winning twenty dollars, regardless of
experimental outcome, but will only be considered for compensation if you complete the entire
study.
For the next minute, you will immerse your right hand to wrist in the container of cold water.
Once this session begins, you will be presented with a set of choices that will determine how you
will spend the remaining four minutes. Timing begins when you immerse your hand in the
container.
[Subject immerses hand in the water]
You will now decide how you will spend the last four minutes of the study. Please take a look at
the following options. [Hands subject list of options]. You can either choose Option I [reads
Option I] or Option II [reads Option II]. After the completion of this first minute, you will have a
one minute period of rest. We ask that you make your decision before the rest period is over.
Any questions?
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