Experimental Design
In this decision-making experiment, the subjects will participate in 2-player economic games. The payments will be calculated in the Experimental Currency Unit (ECU). We will implement two treatment conditions, that is, Dynamic Contest and Repeated Contest. Each subject will be only allocated to one of these two treatments.
In each session, there will be 5 contests in total and the subjects will be randomly, independently, and anonymously rematched with another subject in their session. Each contest consists of 2 rounds. The task in each round is to select a number ranging from 0 to 100, with a decision cost ranging from ECU 0 to ECU 2.85 (cost table attached). In each round, the computer will generate a random number ranging from –50 to 50, This number is added to the subject’s decision number to determine their final number. The final number is calculated as follows:
Final Number = Decision Number + Random Number
In Dynamic Contest, we will rank the two subjects according to the sum of their final numbers from two rounds (from highest to lowest). The member who is ranked 1st will win the contest, while the member ranked 2nd will lose the contest. After subjects complete each contest, they will announce aloud publicly whether they win or lose (“Win” or “Lose”). The winner will get a prize of ECU 6, while the loser will get a prize of ECU 2. Thus, the subject will get a cash earning of the prize minus the decision costs in each contest. Subjects’ total cash earnings will be the sum of the cash earnings across the 5 contests.
In Repeated Contest, we will rank the two subjects according to their final numbers in each round (from highest to lowest). The member who is ranked 1st will win the round in this contest, while the member ranked 2nd will lose the round in this contest. After subjects complete each contest, they will announce aloud publicly whether they win or lose and for how many times (“Win twice”, “Win once”, or “Lose once”). The winner will get a prize of ECU 3 while the loser will get a prize of ECU 1. Thus, the subject will get a cash earning of the prize minus the decision costs in each round of the contest. Subjects’ total cash earnings will be the sum of the cash earnings across 10 rounds from the 5 contests.
At the end of the session, each subject's earned ECU will be redeemed and converted to SGD with the exchange rate of 1 ECU =1.5 SGD. Additionally, all participants receive an SGD 5 show-up fee. If the earnings from the experiment are negative, their payment will be 0. This does not affect the show-up fee. Hence, the overall payment from the experiment is never less than the show-up fee of SGD 5.
After subjects complete the contests, they fill in a simple questionnaire with a few questions asking them to reflect their decisions during the experiment. No personal or identification information will be collected.