Humboldt-Universität zu Berlin - Wirtschaftswissenschaftliche Fakultät

Instructions Lottery 3

ou are almost there! You have almost reached the end of the experiment. You now have to make a decision for ten pairings. For each pairing you can either decide to play a lottery (option A) or not to play a lottery (option B).

The lottery involves winning money 50% of the time and losing money the other 50% of the time. If you turn out to be one of the winners of the 10 € (from the last part), the amount of money won is added to your "wealth ", losses are deducted from it. The resulting amount is paid out to you.
If it later turns out that you are not one of the three people who get the 10 €, then the lottery payouts in the fifth and last part of the experiment will remain hypothetical.
If you decide not to play the lottery (option B), your wealth does not change. This means that you will receive the 10 € from part 4 unchanged if you are one of the three winners of the real money, or you will receive nothing (neither from part 4 nor from part 5) if you are not one of these three winners.

Please make a choice between option A and B for each line.

Which option do you choose? (This table is only an illustration of the decision. You do not have to make a decision here yet.)
1 Option A 50% chance of losing 1€
50% chance of winning 6€
Option B 0€

In each line, you decide for or against the lottery described (with the consequences just described).
Afterwards, a random mechanism first selects one of the 10 lines for each player. From this line, your choice made there is in turn implemented. This means that if you have chosen the lottery, it will be played (with real, monetary consequences, however, only if you will be one of the three winners of the 10 € from the fourth part of the experiment; see above).

What does it mean that the lottery is played? The probabilities are implemented and a random mechanism determines for each player, based on these probabilities, which of the two potential payouts is the winning sum. Since the probabilities for the two payouts are 50% each, you can again think of the random mechanism as a coin toss. If "heads" occurs, you will win, if "tails” occurs, you will lose. The amount of the payout depends on the line determined by the random mechanism. If you did not choose the lottery in the drawn line, nothing changes in your potential wealth (the details have already been explained above).