Economics experiments study consumer behaviors and decision-making patterns. Following course readings, economics gets support from experimental economics to understand to what extent consumer behavior and decision-making process is influenced by the selected research variables (factors). This experiment is usually conducted in a controlled environment. The shared case is about consumer behavior in uncertain conditions. Two variables are important to consider during the experimental investigation of this issue which includes chances of making a loss on behalf of someone and chances of making it again. This situation of loss versus gain will be analyzed using an experimental research study. Because this situation is closely related to behavioral economics and insights concerning the economic factors. There are three main types of economic experiments which include market experiments, game experiments, and individual choice experiments. The third type of experiment will be used in this case scenario. The experiment type is selected because under this experiment we will determine the choice of consumers under uncertainty. Following the theories of Charles R. Plott experimental economics have a timeline that includes important activities such as raising questions, identifying vital discoveries, theory advancements, theory support, and establishment of laws based on raised anomalies.

There are different possible topologies for economic experiments such as conventional lab experiments, artefactual field experiments, framed field experiments, and natural field experiments. Each method is applicable depending on the situation and the process of the experiment. Before selecting only one method it is required to consider the attributes of each method to find applicability for the particular research question. The conventional lab experiment is based on abstract framing and absolute data sets. The artefactual field experiments are non-standard on sub-categories. The framed field experiment use data in a different context that is either the commodity task, information, and set of subjects. Natural field experiments are subjected to natural processes without conditions of experimental datasets. The objective of the experiments is to find the behavior of people before taking major decisions. In this process, the independent variable and dependent variables are considered to find the factors having an impact on the process. The controlled method experiment has been considered that establish the influences as gain and loss are independent variables and decision as a dependent variable. In this method, the main consideration is to develop a control group with the randomization process to have direct access to the data. The experimental outcomes emphasize the simplest theories for the explanation of the results.

In this case, we will use between-subject treatment as well. The objects and things will be changed in the experiment for treatment purposes. For instance, changes from gains to loss are representing treatment. Under this between-subject treatment, different treatments will be implemented for different subjects’ cohorts.

The hypothesis conditions are listed below,

H0: People knowthatthereisachanceofmakingalossonbehalfofsomeoneelse,

H1: People do not knowthatthereisachanceofmakingalossonbehalfofsomeoneelse.

H2: People know thatthere isachanceofmakingagainonbehalfofsomeoneelse.

H3: People do not know thatthere isachanceofmakingagainonbehalfofsomeoneelse,

The hypothesis is designed to gain and test the behavioral hypothesis. The data will be considered and analyzed based on the experimental parameters. The hypothesis will add boundedly rational behavior to the dataset to find the behavior of people towards the decisions. The hypothesis will add sufficient support to the analysis for the internal validity and proper control of the data analysis. The designed variables of the hypothesis will identify the behavioral regularities that are persistent with new situations. The selection criteria for the hypothesis are the experimental subjects that come out for the applications.

In the research, we have mainly two research questions that require a different analysis. The question is related to the choices of people if they know about the conditions and don’t know about,the chances of making profits and losses. To answer this a partial correlation will be conducted. The second question is to find if they know more about making gains or losses. This question is dependent on the responses of participants. To answer this, the linear regression analysis can be conducted to predict the outcomes.

The research is based on the response of the participants. In the experiment, the participants will complete the rating task about the factors and decisions. In the experiment, there were 12 males and 12 females to provide information about the behavior and attitudes before taking decisions. The experiment consisted of two sessions in which participants make decisions for themselves in one session. In the other sessions, the second half of the participants recorded their decisions across the participants. When making decisions for themselves, the participants considered some information about the benefits, gains, and losses. While making the decisions, the participants were asked to imagine products, prices, and benefits. When deciding on the behalf of others, they were asked to consider the same factors. They were more intended to make decisions for someone else on the consideration of minimum prices. To reiterate, participants were asked to make decisions and choices for the others and to predict their behavior for the rating phases. The structure of the research is based on the experiment domination of values and cost. Each subject of the experiment is considered in privacy terms. The behavior of individuals and decisions were tested with the consideration of microeconomic factors such as gains and profits. The controlled conditions are used for the theoretical equilibrium. The pieces of evidence of the data collected in the process are replicable and identifiable at any stage of the experiment. To make the decision more effective, it is important to consider the relevant features of reality in a carefully controlled environment. The experimental process is designed to test the specific hypothesis for the analysis of changes in the variables. The controlled variables are fixed and maintained at some constant level and they have different points in the analysis. The research outcomes rely upon different numbers to imply the large data sets. The variables are subjected to treatment conditions and the selection process. The complicated econometric methods are used to allow statistical tests and critics can run their experiments for this.

Anonymity: The personal details of research participants should not be revealed to any irrelevant third party. Keeping a strict security system for the privacy of personal information will ensure this treatment.

The salienceofpayoff: following this rule, research participants will not be allowed to communicate and discuss research-related information with each other. Research participants will be required to seat behind a partition. Their decisions should be made private as well as individual without any external influence.

Non-deception: researchers should make sure non-deception treatment during this experiment. Non-deception should be controlled in the best possible way without influencing the information and decision-making process of research participants.

Part B

The research aimed to discuss the ways related to the minimum trading price. The objective was to analyze the facts about the moral attitudes of the traders if they prefer to kill a mouse for 10 euros. The outcomes of the report show the moral standards of individuals if they are willing to kill to attain a personal advantage. In the analysis, the willingness shows the passion of individuals to have participated in the trade. This shows that individuals are more tending to become a part of trade and accept the offers. The effects are considered in the market interaction on the moral outcomes that are robust and substantial to take participate in market trading. The controlled questions ensured the role of the participant as if they are fully addressed. The important questions of the articles are listed below,

1. How many euros do you receive besides?

2. Are you willing to kill a mouse for the money?

3. Suppose you are accepting an offer from the seller of 5 euros, what are the conditions of income for you and your seller?

4. What is the income level of the seller?

5. How many euros you will receive at the end in addition to the previous money?

The participants of the research were further analyzed for moral values by considering the control questions. In these control questions, they were introduced with the lottery tickets. It was based on the decision of the person if they like to purchase a lottery or as a consequence, they will kill a mouse in the cage. The decision was solely based onthe personal choices of the participant. Some of the control questions after introducing lottery tickets are listed below,

1. Which least amount you can earn?

2. What amount you can earn the most?

3. What are the possibilities and how likely is it to receive a higher amount?

4. What is the cost of the lottery ticket?

5. Will you kill a mouse for the lottery ticket?

The research aimed to analyze if the participants prefer 10 euros or lottery tickets by killing a mouse or if they prefer the moral standards over the money.

Krupka & Weber, (2009) researched the experimental analysis of the effects of norms in society and pro-social behavior. The research conducted a test for the prediction analysis of work in psychology and how it is influenced by the norms of society. The research focused on the individual behavior and informational influence of individuals behavior in society(Krupka & Weber, 2009). The aim was to determine the behavior of individuals if they are consistent with the norms of society. The research observed prosocial behavior on the part of others and the degree of prosocial behavior in the experiment. The outcomes enabled the researchers to comment and demonstrate the direct effect of norms on the behavior. The experiment analyzed the effect of norms on the behavior and stronger impact of the individuals are analyzed (Krupka & Weber, 2009).

Vohs, Mead, & Goode, (2006) conducted research to identify the psychological consequences of money and how it affects the motivation of people. The research concluded that money can change the motivation of people and behavior towards others. In the experiment, nine different experiments were conducted that suggest if the money is sufficient for the people or they prefer to be free of any dependents and dependency. People have a long debate on the effect of money on human behavior(Vohs, Mead, & Goode, 2006). The purpose of the research is to explore the outcomes emerging through the process. Sometimes, money makes people behave accordingly and feel self-sufficient. The research tested how the concept of money leads people to behave self-sufficiently. The self-sufficient hypothesis accelerates the findings from the behavior of people with money. In the research, the participants were randomly assigned with some conditions and they were reminded of money. This was to analyze their tendency to prefer the process or money (Vohs, Mead, & Goode, 2006).

In the literature, different researchers worked together to identify the role of money in taking decisions and how they affect their behavior. In the research discussed above, it was identified that people tend to prefer money over other moral standards. The researchers proposed different methods to analyze the behavior of people and how they can be improved. The magnitude of the effects can be notable and surprising for the participants as they were familiar with the money. This can manipulate some important environmental changes for the participants to work on and how these affect the decision of individuals about attitude and behavior. Based on the literature, it can be concluded that the self-sufficient pattern helps to find the behavior of people to view money as a good and evil reality of life. In this way, the money is enhancing individualism but diminishing the communal motivations. This can affect the responses of people to work and money(Krupka & Weber, 2009).

Money has been considered as a factor that inducesan impact on the motivation of people and behavior of others for the work and money. The researchers are working on many factors that alter the behavior of participants and others. It is important to bring about the self-sufficient orientation of people and researchers are motivated to find the facts. It is related to the participants that have neutral concepts of money related to the work and new acquaintances. Sometimes, people prefer to make money by neglecting moral standards. Money has been changing the motivation and behavior of people towards others. While conducting the test for the activation of concepts of money, it is important to insulate the state where the people take efforts to attain personal goals. Money enables people to achieve goals without aid from anyone other. The indicators were persistence with the experimental outcomes that people prefer financial resources(Vohs, Mead, & Goode, 2006).

References

Krupka, E., & Weber, R. A. (2009). The focusing and informational effects of norms on pro-social behavior. Journal of Economic Psychology, 30(03), 307-320.

Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The Psychological Consequences of Money. Science, 314(5802), 1154-1156.