Experimental Design Details
In our experiment, participants make decisions for another participant, which we call Alex. There are two objects over which Alex has preferences. Object A: "Discovering Prices" (Paul Milgrom) and "Who Gets What and Why?" (Al Roth), both with original handwritten notes from the authors addressed to Alex. Object B: the same two books with fake notes. Alex strictly prefers Object A over Object B, and this is known to participants. Alex will get Object A or B with certainty, and we might or might not tell him which object he got. It is impossible for him, or anyone else, to tell which object he got once he got it. Moreover, Alex receives a surprise bonus. This is all known to the participants.
We elicit how much participants are willing to reduce Alex's surprise bonus (henceforth, WTP) for him to get Object A instead of Object B in two cases: when he knows which object he gets and when he does not. We elicit this WTP using asking the participants the following twelve questions:
Which books do you prefer Alex to receive?
...the ones with the original notes and $1 or with the fake notes?
...the ones with the original notes or with the fake notes?
...the ones with the original notes or the ones with the fake notes and $1?
...the ones with the original notes or the ones with the fake notes and $2?
...the ones with the original notes or the ones with the fake notes and $3?
...the ones with the original notes or the ones with the fake notes and $4?
...the ones with the original notes or the ones with the fake notes and $5?
...the ones with the original notes or the ones with the fake notes and $7?
...the ones with the original notes or the ones with the fake notes and $10?
...the ones with the original notes or the ones with the fake notes and $15?
...the ones with the original notes or the ones with the fake notes and $25?
...the ones with the original notes or the ones with the fake notes and $50?
We also elicit the WTP for the case when Alex won't know which object he gets, varying Alex's beliefs on the likelihood that he gets Object A (known to the participants).
We add unincentivized open-ended elicitations of the reasons why participants made their decisions. We use human coders to classify participants by whether they understood the experimental paradigm. We analyze the data by this classification.
We correlate elicited WTPs with participants' responses to three (unincentivized) questions that also capture welfare consequences of similar situations.
1. Nozick's Experience Machine
If given the option, would you choose to plug into an experience machine that could provide you with an entirely immersive, simulated reality where you can experience any desirable scenario, despite not being real? Keep in mind that while plugged in, you would never be aware that you are in the experience machine and would believe that the simulated reality is real.
Suppose there was an experience machine that would give you any experience you desired (eating good food, having a successful career, making meaningful connections, etc.). While in the machine, you would not know that you are in it; you would think that what you are experiencing is actually happening.
Would you go into the machine?
Answer options: "Yes" and "No"
2. Unknown tax-funded relief effort
A small town in Arkansas experiences massive flooding, leaving many families homeless. To provide financial relief to the impacted families, the government raises taxes, including a $100 levy on John. In general, John dislikes paying taxes, but he would gladly contribute $100 to the relief effort if he knew about the flood. However, he never learns about the flooding or the relief effort.
Does the government raising taxes to provide financial relief make John better or worse off?
Answer options: "Better off" and "Worse off"
3. Andy Warhol drawings
Hundreds of Andy Warhol fakes, and one original drawing worth $20k, sold for $250 each. An art collective purchased an original Warhol drawing and copied it 999 times. The copies are carefully created so that not even their creators can tell them apart from the original drawing. They then mixed the original together with the copies and sold the 1000 drawings.
Someone got the original Andy Warhol drawing without knowing about it. Is this person better off by getting the original one instead of a copy?
Answer options: "Yes" and "No"