Instructions for the pricing from description condition
In this experiment you will play several independent games. In each game, you will receive the
right to randomly draw a card from a deck, and earn the value stated on that card. You will be
asked to state the price for which you are willing to sell your right to draw from the deck.
At the end of the experiment one game will be randomly selected (all games have the same
chance of being selected). The payment for the study will be the outcome of this game which
will be determined as follows:
The computer will randomly draw a value from a uniform distribution. If this number will be
higher than your selling price then the deck will be sold, and your payoff for the study will be the
value that the computer selected.
In case the computer’s value will be lower than your selling price then the deck will not be sold.
In this case you will draw a random card from the deck and its value will be your payoff for the
study.
Please notice that in the current conditions it is optimal for you to state exactly the price that
reflects your true valuation of the deck.
To illustrate, let’s assume that you decided that your true valuation of the deck is 5. Can you do
better by asking a selling price of 7? Suppose, for the example, that the computer draws 8. Then
you receive 8 and sell the deck, but notice that you would also receive 8 had you asked your true
valuation of 5, so asking a higher price than your true valuation does not improve your position.
Moreover, such action can be counterproductive as in the case that the computer draws a lower
value, like 6. Since you asked for 7 you will miss the opportunity to sell the deck for a good
price. It is also easy to show that it is not worthwhile to ask for selling price lower than your true
valuation (like 3), as in such a case you might sell the deck for a price that is lower than your true
valuation.
So the payoff for the randomly selected game at the end of the study will be determined by the
price you stated and the value that the computer randomly drew. If the value is larger than or
equals your stated price the payoff will be the computer’s value, otherwise you will play the deck
by drawing one card randomly, and your payment will be the value stated on that card (each
point =1/2 NIS).
Good Luck!
Instructions for the pricing from experience condition
In this experiment you will play several independent games. In each game, you will receive the
right to randomly draw a card from a deck, and earn the value stated on that card. You will be
asked to state the price for which you are willing to sell your right to draw from the deck.
Each game includes two stages: a “sampling” stage, and a “decision stage.”
In the sampling stage (the first stage) you will be able to sample the deck unlimitedly. When you
feel that you sampled enough, click on the button “decision-stage” to move to the decision stage.
In the decision stage (the second stage) you will be asked to state the minimum price for which
you are willing to sell the deck.
At the end of the experiment one game will be randomly selected (all games have the same
chance of being selected). The payment for the study will be the outcome of this game, which
will be determined as follows:
The computer will randomly draw a value from a uniform distribution. If this number will be
higher than your selling price then the deck will be sold, and your payoff for the study will be the
value that the computer selected. In case the computer’s value will be lower than your selling
price then the deck will not be sold. In this case you will draw a random card from the deck and
its value will be your payoff for the study.
Please notice that in the current conditions it is optimal for you to state exactly the price that
reflects your true valuation of the deck.
To illustrate, let’s assume that you decided that your true valuation of the deck is 5. Can you do
better by asking a selling price of 7? Suppose, for the example, that the computer draws 8. Then
you receive 8 and sell the deck, but notice that you would also receive 8 had you asked your true
valuation of 5, so asking a higher price than your true valuation does not improve your position.
Moreover, such action can be counterproductive as in the case that the computer draws a lower
value, like 6. Since you asked for 7 you will miss the opportunity to sell the deck for a good
price. It is also easy to show that it is not worthwhile to ask for selling price lower than your true
valuation (like 3), as in such a case you might sell the deck for a price that is lower than your true
valuation.
So the payoff for the randomly selected game at the end of the study will be determined by the
price you stated and the value that the computer randomly drew. If the value is larger than or
equals your stated price the payoff will be the computer’s value, otherwise you will play the deck
by drawing one card randomly, and your payment will be the value stated on that card.
Good Luck!
Instructions for the choice from experience condition
In this experiment you will play several independent games. In each game you will receive the
right to choose between two decks on the screen.
In the “known” deck all cards are equal and their value is stated on the deck.
The “unknown” deck includes different cards and their value is not stated on the deck.
Each game includes two stages: a “sampling” stage, and a “decision stage.”
In the sampling stage (the first stage) you will be able to sample the unknown deck unlimitedly.
When you feel that you sampled enough, click on the button “decision-stage” to move to the
decision stage.
In the decision stage (the second stage) you will be asked to choose once between the two decks.
One card will be randomly selected by the computer and the value on that card will be the
outcome of that game.
At the end of the experiment one game will be randomly selected (all games have the same
chance of being selected). The payment for the study will be the outcome of this game.
Good Luck!
In the pricing conditions, the following quiz was distributed after the instructions to verify
that participants understood the BDM procedure
A participant in the experiment estimates that his/her value of the deck is 6.
The participant states a selling price of 6.
The computer draws a random value.
Case 1: suppose the computer draw value of 7.
The deck is sold/not sold (please circle the correct answer)
The price of the deck (if sold) is _____ (if it is not sold leave empty)
The payoff for the participant is the deck selling price/the value of card randomly selected from
the deck (please circle the correct answer)
Do the above answers hold for all computer values larger than the stated selling price? Yes/No
Case 2: suppose the computer draw value of 5.
The deck is sold/not sold (please circle the correct answer)
The price of the deck (if sold) is _____ (if it is not sold leave empty)
The payoff for the participant is the deck selling price/the value of card randomly selected from
the deck (please circle the correct answer)
Do the above answers hold for all computer values lower than the stated selling price? Yes/No
Case 3: suppose the computer draw value of 6.
This case is equal to case 1
This case is equal to case 2
What selling price is optimal for the participant to state?
a. Lower than his/her true valuation
b. equal to his/her true valuation c. higher than
his/her true valuation
** the deck price refer to the value/price of the right to draw random card from the deck for
money.