Part 1 Instructions - Page 1 of 4
Experiment
This is an experiment in
3 parts
.
Rounds
This part of the experiment,
part 1
of 3, consists of
10 rounds
.
Introduction
You are a
small investor
who has deposited
£1
at the bank and your task in each round is to decide when to withdraw your money. You may decide to withdraw your money
today
or you may decide to wait until
tomorrow
. The bank may
or may not
have enough money to be able to pay you, depending on how many of the other investors decide to withdraw their money today. Provided it has enough money, the bank will pay you
£1.00
if you withdraw
today
or
£2.00
if you withdraw
tomorrow
.
Types of Investors
There are
18 investors
in your group, that is, you and 17 others, all of whom have
£1
deposited at the bank. Of these 18 investors,
9
are of
Type A
and
9
are of
Type B
. Your type will be allocated to you
at random
and will
change
from round to round.
If you are a
Type A
investor, it is worth
£1.00
to you to receive £1.00
today
, whereas it is worth
£0.50
to you to receive £2.00
tomorrow
.
If you are a
Type B
investor, it is worth
£1.00
to you to receive £1.00
today
, whereas it is worth
£2.00
to you to receive £2.00
tomorrow
.
Your Type
Value to you of receiving...
£1.00 Today
£2.00 Tomorrow
Type A
£1.00
£0.50
Type B
£1.00
£2.00
You begin each round by oberving whether you are Type A or Type B. You then decide when to withdraw your money: today or tomorrow. All 18 investors decide simultaneously, so you do not see the other investors' decisions when making your decision (and vice versa). Once everyone has decided, the bank begins paying out money.