Experimental Design

In our game participants receive an endowment of 20 tokens and play for 15 periods. In each round there is a probability p that the game ends and the endowment is lost. In our game p increases round-by-round using the following formula

p^{t+1}=(1+\gamma) p^{t}.

Participants can invest into reducing the probability. Specifically participants can pay in each round 1 GBP to reduce the probability by \Delta.

Our treatments will vary

- the group size (either N=3 or N=12)

- the growth path of p.

There are three exogenous parameters affecting the growth-path: the initial probability (p^{0}), the round-on-round percent increase (\gamma) and the effectiveness of individual action (\Delta). Variation in those “visible” parameters then induces variation in “hidden” parameters such as the doom probability threshold or the number of stages needed to reach that threshold. We will vary these parameters across sessions.

Participants will play this 15-period game eight times with random re-matching in between. They will be paid for one randomly selected round.

Prior to the experiment, participants are asked to complete an online survey. This survey consists of four tasks: one to measures risk aversion, one to measure cooperative preferences, one to measure participants’ understanding of exponential growth, and one to measure participants understanding of compound lotteries. In addition, we obtain participants’ age, gender, nationality, ethnicity, and student status.