Experimental Design Details

Also, see attachment.

I. DATA COLLECTION:

The data are collected through an online experiment. Participants are recruited using Amazon Mechanical Turk (MTurk) and the experiment is run on Qualtrics.

The basic structure of the experimental setup is as follows. Participants are asked to select a set an information source from a list of sources. Information sources are presented in the form of 2x2 tables. These tables show the probability that the source ‘suggests’ state A or B, given that the true state is A or B. The lists can be of different lengths. After selecting a source participants have to complete a belief updating task related to the source they picked.

The experiment consists of the following stages:

Part 1:

A participant is shown a list of L sources.

Each source in the list is visible to the participant only if she/he hovers on it with the mouse.

L can be equal to 10, 20, or 40.

The participant picks one of the sources.

Part 2:

State of the world A or B is drawn, with a probability (prior) that varies in every single task.

The participant learns the prior and is shown a suggestion from the computer, which depends on the true state and on the probabilities specified in the table describing the source.

The participant is asked to formulate a guess about the probability of each of the 2 states.

Part 3: working memory assessment task and demographic questions.

II. TREATMENTS:

Treatment Main

In treatment Main, participants are asked to select the best information source. They are explained that sources that have a higher probability of reporting state A (B) when the true state is A (B) are better. Importantly, longer lists contain at least one source that is strictly better than all sources in shorter lists.

Treatment Satisficing

The setup is exactly the same as in Main, except that participants are asked to apply a satisficing selection rule for Part 1. More specifically, participants are asked to select the first source in the list that has a least a certain level of probability of correctly reporting both states.

Each source selection choice for both treatments exhibits a level of complexity, determined by the length of the list of sources.

III. OUTCOME VARIABLES:

The study contains three outcome variables:

Dichotomic variable, equal to 1 if the participant selected the source correctly according to the Source Selection Rule (the best source for Main, the first to satisfy requirements for Satisficing) and 0 otherwise.

The position of the selected source in the list.

One-hundred minus the absolute distance between the probability assigned to state A in Part 2 and the correct updated probability following Bayes Rule (100 - |participant_guess - bayesian_guess|).

IV. NATURE OF ANALYSES

We analyze our experimental data by means of OLS or probit regressions:

The main dependent variables are (1) and (3).

The main independent variables are:

The length of the sources list.

The position of the best source.

Since multiple observations per subject (9 each) are collected, standard errors are clustered at the subject level.

Additional variables using mouse-tracking data:

Time spent hovering on any sources.

Mouse pattern.

Options clicked on before the final decision and in which order.

Specifically, using the latter, we run the same analysis used in Caplin and Dean (2011) to test satisficing choice patterns, comparing the distribution of the Houtman-Masks (HM) index of participants’ choices consistent with satisficing and a simulated distribution of random choices. For further details see Caplin and Dean (2011) pp. 2905-2907.

V. HYPOTHESES:

Non-rational source selection

Take as dependent variable (1). Run a probit regression having as independent variables the interaction between both the length of the sources list with a dummy for Main, controlling for the performance in the n-back task, the position of the optimal source and the dummy for treatment Main. We hypothesize that in both cases the coefficient of the interaction is significantly smaller than zero.

Selection rule switching (towards satisficing)

Restrict attention to treatments Main. Take as dependent variable (2). Regress on list length, controlling for performance in the n-back task and position of optimal source. We hypothesize that the OLS coefficient of list list length is significantly smaller than zero. For the analysis using the MH index, we hypothesize that the distribution of participant’s MH index significantly differs from the simulated one (KS test).

Information quality vs complexity trade-off

Take as dependent variable (3). Regress on list length, its square and (1), controlling for performance in the n-back task. We hypothesize that the OLS coefficient of list length squared is smaller than zero. Also, when regressing without the square term, we hypothesize that the coefficient of list length is significantly smaller than 0.

Source selection vs belief updating trade-off

Add (1) to the previous analysis having (3) as a dependent variable. We hypothesize that the OLS coefficient of both (1) would be significantly smaller than zero.

VI. EXCLUSION CRITERIA

After subjects read the experimental instructions, they answer a series of comprehension questions. In case a subject makes one mistake, they are excluded from the experiment. Before being excluded, subjects are given a second chance to re-read instructions and answers comprehension questions.

VII. RANDOMIZATION AND SAMPLE SIZE / POWER CALCULATION

Treatments are with the following weights:

Treatment Main: 70%

Treatment Satisficing: 30%

The sample size will be given by (with a total sample size of 300):

Treatments Main: 210

Treatment Satisficing: 90