Cognitive uncertainty and cognitive abilities in preference elicitation

Subjects' preferences in an induced value BDM task will be elicited. Subjects will be allowed to express their uncertainty about their selected bid on a 0 to 10 scale. Subjects will then be asked to have their bid replaced with a payoff maximizing bid. The cost of replacing the bid will vary within-subjects.

Subjects will participate in a computerized laboratory experiment where they will go through a sequence of stages as follows:
- Stage 1: A measure of cognitive ability (fluid intelligence) will be elicited for all subjects.
- Stage 2: Subjects will be endowed with a card that is worth an amount of X€ and will be asked to bid to sell their card to the experimenter. The value of the card will vary to 6, 7 and 9€ within-subjects in a random order. The upper level of the support is varied at 11 and 13 euros.
- Stage 3: Subjects will be asked to bid to sell the card using a radioline that they can click on, in order to state their offer price.
- Stage 4: Once subjects confirm their bid, they are asked to select how certain they are about their bid in order to elicit cognitive uncertainty. Subjects will do that by selecting from a slider from 0 to 10, where 0 is highly uncertain and 10 is highly certain. If they select 10 (highly certain), their bid remains as is. If they select to be highly uncertain then their bid is $[0, Y]$ where Y is the upper support of the allowed bid range varied at two levels within subjects (11 and 13 euros). For each one point deviation from high certainty, the range of the bid is determined as a 10% difference of the upper bound of the bid distribution (which is set to Y€), while range limits are censored to 0 or Y if the function evaluates outside those limits.
- Stage 5: Upon completion of the previous stage, subjects are given the chance to replace their selected bid (or bid range if they stated they were cognitive uncertain) with the payoff-maximizing bid. If subjects select this choice, they can do it at a cost of 0€ (i.e. for free), 0.5€ or 1.5€. If subjects select this option, their bid is replaced with the payoff-maximizing (which is the induced value) and the cost of purchasing the payoff-maximizing bid is subtracted from their payoffs. The cost of purchasing the payoff-maximizing bid will be varied in three levels (0, 0.5, 1.5€) for the three induced values (6, 7, 9€) in a random order. Therefore, 18 rounds/periods will be played in total with the BDM task (3 IVs x 3 costs x 2 support levels).
- Stage 6: After the 18 rounds, one round will be randomly selected for payment. A number will be randomly selected from 0 to Y€ (randomly determined posted price). If subjects' bid is lower than the posted price, then subjects get paid the posted price minus the cost of purchasing the payoff-maximizing bid in the selected round; otherwise they get the induced value of the card minus the cost of purchasing the payoff-maximizing bid in the selected round.

2022-11-01

2023-05-15

Bid deviations from induced values, the level of their cognitive uncertainty, and whether or not they select to purchase the payoff-maximizing bid in relation to their cognitive ability.

There will be a 3x3x2 within-subjects treatments varying the induced values, the cost of purchasing the payoff-maximizing bid and the upper level of the support.

See intervention.

Computer will do all randomizations i.e. will randomize order of treatments within subjects.

Individual.

No

0

200*18=3600

at least 200 subjects

With N=200 we can detect a difference between d=0.125 and 0.338 in bids depending on the assumptions about sigma and the Intra-class Correlation Coefficient across rounds.