Primary Outcomes (end points)
All our outcomes relate to the case when the outcome of the lottery is low. We test the following predictions and hypotheses. “Predictions” refer to Propositions from our model, while “Hypotheses” are explorative.
Prediction 1a: In treatment EXOGENOUS, the likelihood that participants report HIGH is lower for participants who reported LOW in Part II of the experiment.
Prediction 1b: In treatment ENDOGENOUS, the likelihood that participants report HIGH is lower for participants who reported LOW in Part II of the experiment.
Prediction 1c: Considering both treatments together, the likelihood that participants report HIGH is lower for participants who reported LOW in Part II of the experiment.
Prediction 2: In treatment EXOGENOUS, the likelihood that participants report HIGH as FM is lower than the likelihood that they report HIGH as SM after HIGH by FM.
Prediction 3a: In treatment ENDOGENOUS, the likelihood that a principal self-selects to FM is lower for participants who reported LOW in Part II of the experiment when we neglect principals who self-select to FM and report LOW.
Hypothesis 3b: In treatment ENDOGENOUS, the likelihood that a principal self-selects to FM is lower for participants who reported LOW in Part II of the experiment.
Prediction 4a: The likelihood of two HIGH reports is higher in treatment ENDOGENOUS than in EXOGENOUS when we neglect principals who self-select to FM and report LOW.
Hypothesis 4b: The likelihood of two HIGH reports is higher in treatment ENDOGENOUS than in EXOGENOUS. (Note: If H4b is supported by the data, this implies that H4a is supported as well. We nevertheless need both hypotheses, as it may be that only H4a is supported by the data).
We test our predictions and hypotheses both non-parametrically and with regression analyses. In regressions, we control for age, gender, self-reported willingness to take risks, and the answers to the relevant belief questions.