Information Forms and Economic Rationality

Last registered on July 06, 2021

Pre-Trial

Trial Information

General Information

Title
Information Forms and Economic Rationality
RCT ID
AEARCTR-0007920
Initial registration date
July 06, 2021
Last updated
July 06, 2021, 10:45 AM EDT

Locations

Region

Primary Investigator

Affiliation
Universidade Pompeu Fabra

Other Primary Investigator(s)

PI Affiliation
Zhejiang University

Additional Trial Information

Status
In development
Start date
2021-07-07
End date
2021-07-24
Secondary IDs
Abstract
We study individual economic rationality under visual and auditory information forms. Economics research (e.g., Eliaz and Spiegler (2011); Masatlioglu, Nakajima and Ozbay (2012); Dean, Kibris and Masatlioglu (2017); Lleras et al. (2017)) suggests that limited attention may impede economic rationality because people may not have enough cognitive capacity to process all available alternatives. Economic rationality may decrease in cognitive capacity, as suggested by empirical evidence (e.g., Burks et al. (2009)). Auditory cognitive capacity appears to be inferior to visual cognitive capacity, according to evidence from cognitive sciences (Cohen, Horowitz and Wolfe (2009); Kaiser (2015); Plakke and Romanski (2016)). Based on the evidence, we hypothesize that Individuals make choices with lower economic rationality in decision problems based on auditory information than in tasks based on visual information.
External Link(s)

Registration Citation

Citation
Chen, Fadong and Rui Guan. 2021. "Information Forms and Economic Rationality." AEA RCT Registry. July 06. https://doi.org/10.1257/rct.7920-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
In the experiment, there are two treatments: Visual Treatment and Auditory Treatment, where subjects are presented with decision problems in the form of visual and auditory information, respectively. We study between-subjects and within-subjects treatment effects. Specifically, subjects are randomly allocated into Group 1 and Group 2. There are two waves of decisions to make. In the first wave, Group 1 and 2 subjects are asked to make decisions in Visual Treatment and Auditory Treatment, respectively. In the second wave, Group 1 and 2 subjects are asked to make decisions for problems with Auditory Treatment and Visual Treatment, respectively.
Intervention Start Date
2021-07-07
Intervention End Date
2021-07-24

Primary Outcomes

Primary Outcomes (end points)
The key outcome variables in this experiment are economic rationality measured by the choice data. They include Generalized Axiom of Revealed Preference (GARP) violations, Strong Axiom of Revealed Preference (SARP) violations, Houtman-Maks' index (Houtman and Maks, 1985), Afriat’s (1967, 1972) critical cost efficiency index (CCEI), and first-order stochastic dominance (FOSD). We will compare all consistency scores of individuals under different treatments.
Primary Outcomes (explanation)
The GARP violations index counts how many combinations of choices violate GARP. SARP differs from GARP by excluding indifference between alternatives in the preference. The Houtman-Maks' index finds the minimal subset of observations that need to be removed from the data to make the remainder rationalizable. The CCEI measures the proportion of income that a person wasted by the choices that violated revealed preference. FOSD violations represent the mistake of losing the chance to gain better outcomes without taking more risks.

Secondary Outcomes

Secondary Outcomes (end points)
Our secondary outcomes include individuals' satisfaction with their choice, and response times
Secondary Outcomes (explanation)
We measure individuals' satisfaction by survey questions after the choice tasks. Participants simply provide their subjective evaluations of satisfaction with their choices. We measure the response time that subjects use to make decisions in different treatments.

Experimental Design

Experimental Design
The experiment will be conducted in the Zhejiang University laboratory. We recruit subjects via the sample pool of the Zhejiang University laboratory. The experiment consists of three sections. In the first section, subjects make economic decisions according to their allocated treatment. In the second section, subjects are asked to complete cognitive tasks. In the last section, subjects are asked to indicate their preferences on consistency and report demographic information.
Experimental Design Details
In the first section of economic decision, we adapt twenty risky decision problems adapted from Kim et al. (2018). Each decision problem comprises eleven randomly ordered options from a budget line with a unique price and endowment combination. An option (x; y) rewards x or y tokens with equal probability. There is one decision problem for comprehension check. In the second section, we measure the subjects' cognitive ability (or IQ for short) using the International Cognitive Ability Resource (ICAR) test (Condon and Revelle (2014)). We also measure selective attention by the Stroop (1935)'s task. In the third section, subjects are asked to rate their comfort with a scenario of choice inconsistency by selecting a number between zero (least comfortable) and ten (most comfortable). The scenario is based on the attraction effect (Huber, Payne and Puto (1982)), which is a common behavioral phenomenon violating consistency with preference maximization (Tversky and Simonson (1993)).
Randomization Method
The randomization will be done by the online survey tool Qualtrics.
Randomization Unit
Individual.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
120 individuals.
Sample size: planned number of observations
120 individuals.
Sample size (or number of clusters) by treatment arms
60 individuals in Group 1 and 60 individuals in Group 2.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Academic Ethics Committee at Zhejiang University
IRB Approval Date
2021-07-06
IRB Approval Number
N/A

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials