Humboldt-Universität zu Berlin - Wirtschaftswissenschaftliche Fakultät

Instructions Lottery 1

This is the first part of the experiment.
In the following, you will face 10 different decisions. Each decision corresponds to a choice between 2 lotteries - lotteries A and B.
The table below represents an example of such a lottery pair and should be understood as follows:
If you choose lottery A, you will win 200 € with a probability of 40 % and 160 € with a probability of 60 %.
If you choose lottery B, you will win 385 € with a probability of 40 % and 10 € with a probability of 60 %.

The probabilities in the example can be explained as follows:
You have a bowl with 100 balls. 40 of them are red, 60 are green. Then a ball is blindly drawn.
If you choose lottery A, you will receive 200 € if the ball is red or 160 € if the ball is green.
If you choose lottery B, you will receive 385 € if the ball is red and 10 € if the ball is green.
In the decision situation, you will see that the probabilities, i.e. the distribution of the balls in the bowl, change in each row.

Which lottery would you rather play? (This table is simply an illustration. You do not need to make a decision here yet.)
Lottery A 40% chance of winning 200€
60% chance of winning 160€
Lottery B 40% chance of winning 385€
60% chance of winning 10€

On the next page, you will be presented with ten comparisons between two lotteries, Lottery A and Lottery B.
Please indicate in each of the 10 lines whether you would prefer to play lottery A or B. This decision is potentially relevant to your payout.

More precisely, your payout results in the following way: You choose one of the two lotteries in each line. By doing so, you also determine the possible probabilities and payoffs that are relevant for the draw.
In addition, a random mechanism selects one of the 10 lines for each player. The lottery you have chosen in this line will then actually be played out. The probabilities of the lottery are implemented and a random mechanism determines which of the two potential payouts will be the lottery prize based on these probabilities.
At the end of the study, 3 participants will be drawn from all study participants whose lottery prize in this part of the experiment will actually be paid out. The probability that you will be drawn is about 1:50.
So keep in mind: potentially, there is (quite a lot of) money at stake.