You start off with $15, which is your reward for participating. You will be bidding to win a unit of EconScrip. If you place the highest bid in the auction, you will win the EconScrip, and it will be immediately and automatically redeemed for cash.
In order to decide how much you want to bid, there are two things you need to know about what happens to the winning bidder:
1. What is the redemption value of EconScrip? Redemption values differ from person to person. Your own redemption value has already been determined; it will be revealed to you momentarily.
2. How much will you pay for the Econscrip if your bid is highest? You pay the amount of the second-highest bid -- i.e., the highest bid placed by any other participant in the auction.
Of course, we won't collect any money from you, we'll just deduct it from your redemption value. Thus, if you win the auction, we'll pay you as follows:
Total earnings =Notice that it is possible to lose part of your $15 reward for participating. That would happen if you win the auction but the second-highest bid exceeds your redemption value. If you win the auction and the second-highest bid exceeds your redemption value by more than $15, we'll just cancel the debt. In other words, there is no way you will end up having to pay any money by participating in this experiment.
Your reward for participating ($15) plus Your personal redemption value for EconScrip minus The second-highest bid
You may find it helpful to consider a couple of examples in order to see how your earnings are determined. After you read each example, please answer the accompanying question(s). You must answer these questions to receive your $15 reward for participating, but your earnings will not depend on whether you answer them correctly.
Example 1: Suppose the highest bid placed by anyone else is $33.10, but your bid is higher. Then you're the winner of the EconScrip. Suppose that your redemption value is $97.30. Then your total earnings would be
$15.00 Reward for participatingYou would receive a money order from us for $79.20. Notice that your own bid is not used to calculate your earnings. Since the highest bid by anyone else is $33.10, any bid you place above $33.10 would make you the high bidder, and you would earn the same amount, $79.20. But if your bid was less than $33.10 you would not be the high bidder, so you would not win the auction, and your total earnings would simply be your $15.00 reward for participating.
+ 97.30 Your personal redemption value for EconScrip
- 33.10 Second-highest bid
Question 1: Suppose you placed the highest bid, your redemption value is $83.20, and the second highest bid is $53.10. What are your total earnings?
Total earnings = $
Example 2: Suppose you placed the highest bid, so you're the winner of the EconScrip, and suppose your redemption value is $46.43. Suppose that the highest bid by anyone else is $51.00. Then your total earnings would be
$15.00 Reward for participatingYou would receive a money order from us for $10.43. The money order would be less than your participation reward by the amount that the second-highest bid exceeded your redemption value (i.e., by $4.57.) Notice again that your own bid was not used to calculate your earnings, it was only used to determine whether or not you were the high bidder. Your earnings would be the same for any bid above $51.00. A bid below $51.00 would be outbid by the $51.00 bid, and you would not win the auction in that case, so your total earnings would simply be your $15.00 reward for participating.
+ 46.43 Your personal redemption value for EconScrip
- 51.00 Second-highest bid
Question 2: Suppose you placed the highest bid, your redemption value is $63.70, and the second highest bid is $69.90. What are your total earnings?
Total earnings = $
Example 3: Suppose you did not place the highest bid. Then regardless of your redemption value you will receive the $15 reward for participating.
Question 3: Suppose you did not place the highest bid, your redemption value is $26.30, and the second highest bid is $49.38. What are your total earnings?
Total earnings = $
What if there's a tie? It doesn't happen often, but it's possible that two or more bidders will submit the exact same bid and that the amount they bid turns out to be the high bid. In that case we'll randomly choose which of the high bidders wins the EconScrip and has to pay the highest bid by someone else (which in this case would be equal to his own bid). Each of the high bidders will have an equal chance at being selected as the winner.
When the auction has been completed you will receive an email from us reporting your total earnings, and also reporting all the bids that were placed in the auction.
Can I bid again and earn more money? You can't return to this web page and bid in another auction, nor can you bid in the same auction again. At a later time we may invite you to participate in a new auction, but until you receive such an invitation you will only be able to bid in just this one auction.
Please enter the address where you would like your money order mailed. Your name and address will be kept totally confidential.
The universities that are sponsoring this research require that we explain the risks and benefits of participating in the experiment and obtain your consent. Please read the following statements and check the consent box if you are willing to participate.
Risks and Benefits: There are no known risks to participating in this experiment. The benefits include monetary compensation, the amount of which is based on your own decisions and the decisions of others in the experiment.If you are willing to participate in the experiment please indicate this by clicking in the consent box. You are free to withdraw from this experiment at any time prior to submitting a bid, by simply departing from this web site. But you must submit a bid in order to earn the $15 reward for participating.
Confidentiality: Participants will never be publicly identified by name or any other identifying characteristic(s), either during or after the experiment. The researchers conducting this study will not disclose to any other party a participant’s email address or mailing address.
Questions? If you have any questions about this experiment, please contact us by email: firstname.lastname@example.org. If you have questions about your rights as a research subject please contact Kathy Graham from the Office of Research at UCSB by email: email@example.com.
|It's Time to Bid!|
Number of Bidders: Many people have been recruited from eBay to participate in this experiment. Five people will bid in this particular auction. (If some of the five people we've invited don't bid, we'll add bidders until five people have bid.)
Redemption Values: Each bidder’s redemption value for EconScrip is determined by a separate random drawing of a value between $25 and $125. Every value between $25 and $125 has an equal chance of being drawn: you have the same chance, for example, of being assigned $102.13 or $39.96, or any other value between $25 and $125. Because each bidder's redemption value is drawn separately, no two bidders will typically have the same redemption value.