Experimental Design Details
In the experiment, participants are given an endowment of two goods and then face options regarding the combination of changes in the two goods. For example, given an endowment of eight juices and eight chocolates, participants choose one of two options: X) four more juices and four more chocolates, or Y) two more juices and seven more chocolates. To estimate the utility function and the indifference curve, participants make many choices: a choice block consists of 38 choices.
Each participant responds to all four selection blocks. The endowments and options differ in the choice blocks. The number of goods in the endowment is as follows.
B1) endowment of good A is 0, and endowment of good B is 4,
B2) endowment of good A is 4, and endowment of good B is 4,
B3) endowment of good A is 8, and endowment of good B is 4,
B4) endowment of good A is 8, and endowment of good B is 8.
To investigate the loss averse propensity in the riskless choice of two goods, our choice task is based on the gain and loss ranges. As for the gain range, the experimental design in this study is fundamentally the same as Chung et al. (2019), except the initially given quantities. In the loss range, Chung et al (2019) focus on the case that both quantities of two goods decrease, while our study considers the case that the quantity of a good decreases but that of the other increases, following the original paper of the loss averse propensity by Tversky and Kahneman (1991).
Blocks B1 and B2 are choices regarding the gain range, and block B3 is the choice when only one of the goods is in the loss range. Block B4 is the choice when two goods are in the loss range.
The main experimental treatment is a 2x2 design. One is the goods to be used and the other is the order of the blocks. Two goods used in Chung et al (2019) are a beverage and a snack whose relationship is not substitute. In treatment Beverage-Snack of our experiment, participants will be asked to make decisions for a beverage and a snack (chocolate and orange juice), and in treatment Beverage-Beverage, participants will be asked to make choices for two kinds of beverages (orange juices of two popular companies) which are considered substitutable.
As for the order of the blocks, we cannot try every combination, so we will implement some order. In treatment Order1, the order is B1, B2, B3, and B4. In treatment Order2, the order is B3, B2, B1, and B4. If feasible, we implement a different order: in additional treatment Order3, the order is B2, B3, B1, and B4.
The following questions will be asked in the post-experiment questionnaire.
Q1) Did you understand the content of today's experiment (what it is about and how to perform the procedure)? (4-point scale)
Q2) Please tell us your gender. (Male/Female/Other)
Q3) Please choose the option that best describes how much you like or dislike each of the following foods used in this experiment. (7-point scale)
Q4) How much do you think each of the foods used in the experiment today cost?