This is a reflective essay on a survey that we were given to conduct during our course study on Behavioral Economics. The survey is based on the behavioral approaches of the individuals or set of individuals gathered for this survey towards individual decision-making given a particular situation or condition. This shows how different people respond to the same situation, that is how responses vary from one individual to another to the same plot, and understand which group of individuals each belongs to. The survey follows a particular questionnaire for all the individuals. This reflective essay presents the analysis of the experiment done and the comparison of the behavior or decision-making between myself and others.
In the beginning, all the individuals are provided with a consent form that states some important acknowledgment regarding the purpose of the survey, confirmation of voluntary participation by the individuals, and maintaining the privacy of the information collected during and post-survey. Nonetheless, all the individuals are paid or rewarded with a certain amount of money for participating in the survey.
The survey starts by choosing a random sequence of seven numbers as a participant number to keep the numbers c confidential. The survey consists of eleven decision tasks and ten survey questions. The individuals are needed to choose options as per their decision in every task. We jot down the data found from the survey and quantify them with the range of numerics to analyze the varying behavioral approaches of every individual.
In task 1, there are ten sub-decisions each with two options to select from. The two options are the range of payments and rate of interest annually for each sub-decisions at one week which is option A and in seven weeks which is option B. This survey analyzes the time preferences or the level of patience possessed by each individual if they accept to wait for seven weeks or they want to experience the output in a matter of a week given the ten sets of combinations of payment levels. Experts say that “patience” can be considered as the choice of experiencing the benefit earlier to receive more benefits when delayed (Do and Shin 2017). The survey data shows the results of flip-over points following the time preference by measuring individual discount rate (IDR) in the theory of experimental economics (Rong et. al 2019) My score in this task is 6, which indicates towards the impatient side of me and the preference of quick and small earning. Following the data, it can be concluded that 1 is the indicator of maximum patience and 11 is the indicator of least patience level. Looking at the class average of 4.75 and mode 1, it can be deduced that the majority of the individuals are inclined towards waiting for longer and getting paid higher. For more people, earning higher after a long period rather than less money in a short period is a better economic decision.
Task 2 is a lottery-based survey, where there are five lotteries with two events each, one lottery needs to be chosen to play given a combination of earning opportunities with equal chances of occurrence. This survey gives an idea about individual risk preferences or risk-taking factors in a 50-50 gamble. Here, I choose the last gamble that involves the maximum risk also the maximum earning opportunity. The survey data on the choice of gamble suggests that choosing gamble 1 is the most risk-averse attitude and choosing 5 is the most risk-seeking attitude. Following the result with 2.98 mean and mode at 5, we can conclude that most of the individuals choose the fifth gamble with maximum risk factor with maximum earning opportunity and there are a good number of individuals who avoid taking that much risk even though the earning range is much lesser when the risk factor is lower. On this note, an interesting aspect is whether gender has any influence on the tendency of risk preference (Nelson 2017).
Task 3 is a form of a public good game where the groups of five random individuals from the participants are formed and each member will be given ten tokens to allocate between personal funds and group funds for each. Given the combinations of fund accumulation strategies and opportunities, the personal fund gets 0.80 dollars per token allocation and the group fund gets to accumulate 0.40 dollars for each member of the group for the allocation of each token. Following this game, I allot zero tokens for the group contribution, which gives rise to the existence of “free riders” in the economy (Oya and Ohtsuki 2017). The survey data on group or public fund contributions reflect that most individuals are allocating five tokens per group and keeping the other five for their personal funds, securing a specific earning for themselves, but also putting some funds as the contribution for the group gives an understanding of the “cooperative” approach of the individuals.
Task 4 is about an ultimatum game, in which two random participants are paired and allotted 10 dollars, of which the proposer proposes the allocation of that money between the proposer and the responder and the responder may choose to accept or reject the proposal of allocation. The game goes in a way where if the responder accepts the allocation then they both receive money as per the allocation stated by the proposer and if the responder rejects the proposal then no one gets any money. In this task, I am the responder and I set four dollars as the minimum expected offer, below which I will reject the proposal. The data shows that the minimum acceptable offer amount is 5 dollars for most of the responders in every pair. It can be deduced that individuals try to play a risk-avoiding fair game or thought of “fairness” in this case where both earn equal amounts at the end of this task. Following Task 8, where I am the proposer of the same format of game I offer my responder five dollars. So the allocation looks fair to both and we both earn five dollars each instead of none.
Task 5 is about the classic dictator game, which is again a game forming pairs of a sender and a receiver where the sender is given ten dollars to choose between keeping the whole amount, giving away the whole, or giving a portion of it to the receiver. There seems to be no penalty for keeping all the money to yourself, however, the data of the survey shows that there are individuals who choose to keep the whole, also there is a good set of individuals who are willing to give away more than the half of the whole. In this task I am the sender, I choose to send the receiver half of the portion when my partner expects to receive at least four dollars, likewise, the overall data reflects that most of the senders are willing to offer half and keep half of the whole amount while the most of the receivers in every pair expect at least half of the whole amount (following the results of Task 9). This is an interesting approach of individuals towards their corresponding partners in a task that grabs curiosity to analyze further.
Task 6 is a trust game, here pairs of one sender and one receiver are formed and the game is formed as – the sender will choose to give away whole, none or a portion of ten dollars to the receiver and the receiver receives the three times of what sender sends and gives out a portion whole or none of his or her earning to the sender. Based on the sender’s offer to the receiver in the first place, the receiver would like to return an amount to the sender. In this task, I am the receiver, and my average percentage of possible return is 26.54 percent when I am sent one dollar. When the overall data reflects that, most of the individuals or receivers opt for about 29.5% of the average return in response to ten dollars sent to them (following the task 10 data).
Task 7 and 11 are about the joy of destruction. In the former, I am the decision-maker and in the latter, I am the receiver. In this task, the decision-maker holds ten dollars and the receiver holds five dollars; now the decision-maker may decide upon decreasing the receiver’s holding of five dollars, keeping his or her holding of ten dollars unchanged. Given the data on destroyed amounts by the decision-makers and expected destruction values by the receivers, I choose to decrease zero dollars from my receiver’s holding, while I expect to lose at least three dollars when I am the receiver in this game. The overall data says that in this destruction game most individuals tend to decrease zero dollars and expect to be decreased by zero dollars. This is called the “homo-economicus” approach towards each other which is a clear indication of the altruistic and trustworthy parameters of an individual.
A survey questionnaire asks every individual to score themselves over the parameters of patience, risk inclination, cooperation, fairness, strategy, altruism, trust, and trust-worthy. After decoding the base of the tasks or experiments performed and understanding the approaches or the behavior of individuals, it seems the scoring patterns are quite random or inconsistent, for example, I would not want to contribute over the group fund in task 3, however, I scored myself 7 in the cooperation parameter. I scored myself 7 in the patience parameter, while I would tend more towards a quick smaller value of earning rather than waiting for longer to earn more. In terms of fairness, my score looks about right as in the tasks of sender-receiver games, I opted for the options where I and my partner both earn an equal amount of money at the end of the task. However, I scored myself 4 in risk-loving, while it should have been towards the higher range as I chose the gamble in task 2 that involved maximum risk with maximum earning opportunity. In the trust game and joy of destruction game discussed above, my decision-making approaches are clearly towards the trust-worthy aspect. So scoring 9 seems about right. However, task 11 reflects that I am not trusting my partner in the joy of destruction game as I think my partner may decrease three dollars from my five dollars holding. Scoring 9 in the trusting aspect looks inconsistent. About being strategic, I scored myself low as I did not perform in a way where my approaches will ensure that I will earn more money from each task. However, overall the score in this parameter is at 7, which is more than average, which I think is again inconsistent as most of the participants tried to play a more fair and less strategic game throughout the entire series of tasks or experiments.
References
Do, Y.K. and Shin, E., 2017. Bidirectional relationship between time preference and adolescent smoking and alcohol use: Evidence from longitudinal data. Addictive Behaviors, 70, pp.42-48.
Nelson, J.A., 2017. Gender and risk-taking: Economics, evidence, and why the answer matters. Routledge.
Oya, G. and Ohtsuki, H., 2017. Stable polymorphism of cooperators and punishers in a public goods game. Journal of Theoretical Biology, 419, pp.243-253.
Rong, R., Grijalva, T.C., Lusk, J. and Shaw, W.D., 2019. Interpersonal discounting. Journal of Risk and Uncertainty, 58(1), pp.17-42.
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