Intervention(s)
The experiment consists of two parts, each of which proceeds in multiple rounds.
In each round of the first part, the subject decides whether to participate in a gamble that depends on
a state of the world s. The state is good (s = G) with prior probability μ or bad (s = B) otherwise. If
the subject participates in the gamble and the state is bad, she suffers a monetary loss L. If the state is
good, she does not suffer a loss. The subject receives the incentive payment m if she participates; otherwise
she receives nothing. Before deciding whether to participate, the subject chooses one of two information
structures I = {IG,IB} from which she observes a stochastic signal about the state. Information structure IG is statewise biased towards G relative to IB. Decisions in this part provide all information required to test UIH-behavioral (formalized in Proposition 1 and Corollary 1).
In the second part of the experiment I elicit the welfare benchmarks needed to test UIH-normative in an ex-ante welfare framework. In each round, the subject reveals her certainty equivalent for a lottery that leads to a gain g ≥ 0 with probability p or to a loss l < 0 with probability (1 − p). Unbeknownst to the subject, the parameters g,l, and p correspond to the participation decisions she faced in the first part of the experiment after having observed a signal from the information structure she had chosen. Crucially, the success probability p is equal to the posterior a Bayesian would have held at that stage. For instance, if, in the first part, the subject faced the incentive m and had observed a signal σ from information structure I, then the corresponding lottery in part two is given by g = m, l = −L + m, and p = γ_{σ,I}.
In part 1 of the experiment, the subject decides whether to accept a ‘venture’ that may either ‘succeed’ or ‘fail,’ in exchange for a ‘venture participation payment.’ If the venture succeeds, she can keep the venture participation payment, and no further consequences occur. If the venture fails, she must ‘pay damages’ and may or may not keep the venture participation payment (depending on treatment; see below). Before deciding whether to participate, the subject chooses between a ‘bold advisor’ (the participation-biased information structure) and a ‘cautious advisor’ (the abstention-biased information structure). She then observes a stochastic signal which reads either “The [type] advisor recommends: Participate in the venture!” (accompanied with a thumbs-up symbol on green background) or “The [type] advisor recommends: Don’t participate in the venture!” (accompanied with a thumbs-down symbol on red background). In order to alert the subject to the fact that a new state is drawn in each round, each round begins with a display of 20 red and green symbols signifying ventures that are successes and failures. She clicks a first time to hide the colors, and clicks three more times to shuffle the ventures (animation). A final click on a button randomly selects one of the ventures. The subject learns that the venture thus selected is hers for the round.
Part 2 of the experiment is framed neutrally. It simply describes the amount of money the subject can gain or lose from participating in each gamble, the corresponding success probability, and the certain amount of money the subject receives or loses if she refuses the gamble.
Subjects receive a completion payment of EUR110 to which gains are added and from which losses are discounted. The amount a subject can lose from participating in the gamble in the bad state is L = EUR100. Subjects face incentive amounts m ∈ {20, 30, 70, 80} euros. The set of information structures is given by IG = (1,0.5) and IB = (0.5,0).