5.7 Appendix B: Instructions
5.7.1 Instructions for Injurers
A short study on decision making
We are conducting a survey about care choices. The time needed to complete this survey is approximately 30 minutes.Please read the instructions carefully.
Imagine that you have an initial portfolio of 140 points. Your choices in the survey and chance will influence your final portfolio and also the final portfolio of another participant. For your participation in this study, you will receive extra-points for the final grade of the course exam.
You are randomlymatched with another participant, whose identity will remain private information.
Both you and the other participant have been assigned the role of drivers.
Your task is to decidehow much you want to invest in precautions to avoid a collision causing an economic damage to the other participant’s car.
The more precautions you take, the higher the cost for you, but the lower the prob-ability of causing an economic damage to the other participant’s car.
The other participant cannot take any precautionto avoid the collision.
Scenario 1
If the accident happens,you will not have to compensate the other participant for the economic damage you caused to his/her car.
You can decide how many points you want to spend in precautions.
• Please look at the first row of the table, you can decide to spend zero points in precautions. In this case you get the initial earning (§140) and do not suffer any cost of care. If you invest zero in precaution, the collision happens with a probability of 85%.
• Look at the second row, investing 5 points in precautions reduces the probability of collision to 75%, and your final earning will be 140 - 5 = §135.
• Look at the bottom row of the table, investing 60 points reduces the probability of collision to 25%, and your final earning will be 140 - 60 = §80.
The economic damage to the other participant’s car in case of collision amount to §80.
If an accident happens, the other participant bears the loss you caused to his/her car.
If the accident happens, the final earning of the other participant will be 140 - 80 =
§60.
If the accident does not happen, the other participant keeps the initial endowment of §140.
Let consider the following example. Imagine that you decide to invest 5 points in precautions:
• The probability of a collision is 75%;
• Whether the accident happen or not, your final earning will be 140 [initial points]
- 5 [cost of precautions] = §135, since you never pay to compensate the other participant;
• The other participant will earn §140 [initial earning points] if the accident does not happen, or 140 - 80 [accident cost] = §60 if the accident happens since the victim will not receive any compensation for the accident loss.
In the following, you will be asked to answer three questions to check your under-standing of the instructions.
1. Assume that you have invested 21 points in precautions. What is the correspon-dent probability of collision?
• 75%
• 45%
• 55%
• 25%
2. Assume that you have invested 12 points in precautions and that the collision happens. What is the final earning for you and for the other participant?
• You: §95; Other participant: §60
• You: §108; Other participant: §60
• You: §128; Other participant: §60
• You: §128; Other participant: §140
3. If the accident happens, you have always to compensate the other participant for the economic damage you caused to his/her car.
• True
• False
Please answer the question below. Your final earning and the final earning of the other participant will be computed based on your choice.
Based on the table above, how much would you like to spend in precaution to avoid causing a damage to the other participant’s car?
• § 0
• § 5
• § 12
• § 21
• § 32
• § 45
• § 60
Scenario 2
Consider now thatyou have always to compensate the other participantfor the economic damage to his/her car. The other participant cannot take any precaution to avoid the collision. You can decide how much to spend in precautions.
• Please look at the first row of the table, you can decide to spend zero points in precautions.
– If the collision does not happen (probability 15%), you get the initial earn-ing (§140) and do not suffer any cost.
– If the collision happens (probability 85%), you have to compensate the other participant for the damage caused to his/her car, so you get 140 - 80
= §60.
• Look at the second row of the table, investing 5 points in precautions reduces the probability of collision to 75%.
– If the collision does not happen (probability 25%), you get the initial earn-ing minus the cost of care, 140 - 5 = §135.
– If the collision happens (probability 75%), you have to compensate the other participant for the damage caused to his/her car, so you get 140 5 -80 = §55.
• Look at the bottom row of the table, investing 60 points reduces the probability of collision to 25%.
– If the collision does not happen (probability 75%), you get the initial earn-ing minus the cost of care, 140 - 60 = §80.
– If the collision happens (probability 25%), you have to compensate the other participant for the damage caused to his/her car, so you get 140 - 60 - 80 = §0.
If an accident happens, you will always have to compensate the other partici-pant, that is, you always bear the damage of §80.
Whether the accident happens or not, thanks to your compensation the other participant will always receive §140.
Let consider the following example. Imagine that you decide to invest 5 points in precautions:
• The probability of a collision is 75%;
• If the accident happens, your final earning will be 140 [initial points] - 5 [cost of precautions] - 80 [compensation for damages] = §55;
• If the accident does not happen, your final earning will be 140 [initial points] - 5 [cost of precautions] = §135;
• Whether the accident happen or not, the other participant will always earn §140 [initial points] since he/she will always receive compensation in case of an acci-dent.
In the following, you will be asked to answer three questions to check your under-standing of the instructions.
1. Assume that you have invested 12 points in precautions and that the collision does not happen. What is the final earning for you and for the other participant?
• You: §140 ; Other Participant: §48
• You: §140 ; Other Participant: §128
• You: §48 ; Other Participant: §140
• You: §128 ; Other Participant: §140
2. Assume that you have invested 12 points in precautions and that the collision happens. What is the final earning for you and for the other participant?
• You: §95 ; Other Participant: §140
• You: §108 ; Other Participant: §60
• You: §48 ; Other Participant: §140
• You: §48 ; Other Participant: §60
3. If the accident happens, you have always to compensate the other participant for the economic damage you caused to his/her car.
• True
• False
Please answer the question below. Your final earning and the final earning of the other participant will be computed based on your choice.
How much would you like to spend in precaution to avoid causing an economic damage to the other participant’s car and then paying compensation?
• §0
• §5
• §12
• §21
• §32
• §45
• §60