So, welcome back. Also, for those of you who are not interested in me talking about risk
attitudes, I'm not an expert on risk attitudes, so maybe you know this better. That could
be very well be the case. So, but let's jump to Ztree. And for this, I'm going to ask you
double click on Ztree, please.
And please open the program risk. Risk is also...
Where are we?
So, here we are.
This is the program risk.
This is an example of the simple solution for measuring risk. And I just want to go with you
through the stuff. It contains several steps that you may want to not implement straight away,
but first have a look at my systematic approach to Ztree, and that comes in the next step.
But it is useful to give you some ideas. You already have a structure for asking people about
risk attitudes. So, maybe this is a good starting point for you to work on how to measure your
risk attitudes that you want to elicit from people. And so, at the end of the day,
maybe this section of the lecture plus the next lecture gives you in combination enough
such that you can develop your own risk assessment.
Okay. So, this is, again, something where we say, okay, by default, it's
one person in the background. I double clicked on background with one person, but then you can
easily adjust that to the number of participants in your room. And it's only one run round. Here,
I already fixed the exchange rates to use the pay off file, but that comes later.
Okay. To begin with, what we want to have is, if you remember, we need a list of two options or
eight options or six of lotteries, and then people have to choose one of the four or the eight.
Here, for the simplicity of just for demonstration purpose, I have only two options.
And this is option one with the payoff of 28 and 28. So, it's the secure payoff.
And a slightly more risky option, that's option two, and it's 24, 36.
As it is explained here later on, you have 50% chance to get both.
This means that this option is slightly less, slightly more attractive in terms of expected value.
Meaning that if you go for this option, it could be either risk neutrality or risk aversion. So,
this is not a perfect fit here. So, you need more options to disentangle a risk aversion from
playing around with the expected value. Okay. But just for the demonstration,
I have these two options. So, what I did was basically to introduce a new program.
Forget about this stuff here. This comes later. So, only here we have option one and option two,
and I called these two options differently. And one nice thing is that you can also now
copy, paste here additional options, and then they are 0, 3, 0, 3, 1, 0, 3, 2, and so on.
Now, I'm going to the active screen, because if you think about that, we only need two screens.
The first active screen is where I make a decision. Okay. Choose one of the two options here,
of the two lotteries. Then I make a choice. Then chance kick in determines the payoff.
And then I get a payout. That's the screen number two. So, in screen number one,
that's just a normal screen. I enlarge a bit of the time. But again, there is no
leave stage after timeouts, actually. This doesn't matter, but I gave them more time.
There you see in the active screen now something that is a bit different from what you have seen
so far. So far, you have seen only standard boxes. Remember a new box? Standard box.
Now, we went for, I went for the grid box.
And the nice thing about the grid box is that you can display information in a grid.
Therefore, it's called the grid box. So, it has a number of rows and columns. Looks like a matrix.
And it now depends on what option you say. Here we said that the input follows row by row.
So, all the items that we put here follows the structure that it fills up the three by five
matrix. The first three one is the first row. So, these are the headers of the matrix. So,
it's option one, it's had, and it's whatever. Oh, sorry, row by row. So, this is option
one. In this option one, you have three rows. The first column, the first row has five columns.
Yeah. So, you have option in the first cell of the first row, it says option one. And the second
row, it says in the second column, sorry, it says had, meaning that if I flip a coin, I have had,
because it's 50%. And then I get, and that seems to be or will be new for you, then you get
tala. Yeah, everything is now denoted in tala. And it says it has this strange command here.
Forget about this for a moment. Treat this as if it is written here 28 tala. Yeah. And then
comes the additional information with 50% of the chance. So, these are the one, two, three, four
first columns of the first row. And this is the fifth. Now, starts the second row. The second
row starts with an empty item, another empty item, another empty item, another empty item,
and then an input option. In this input option, there will be a marker where you can mark that
you take option one. Then starts the third row of this grid box. And in the third row,
we have tail. Tail gives you an output of 28 tala, whatever this means here, it says 28 tala.
And then final with 50% of the chance. And then it's an empty item. So, this is basically
this first option with a frame around is the lottery number one. Notice that I defined here
the height of this box, also the distance from the margin, so that we have right in the middle
of this screen, we have this option number one. Then we have the second option.
Again, simple, the same structure that we have this grid box. Grid box contains
three rows and five columns. And then in the first row, in the first row and the first
column, it says option two, then 32 tala, I think, and then 50%. Then follows the next line,
empty line. At the end of this line, there's a checkbox where you can check if you take option
number two, and then follows in the last row this last information about what happens if you get a
tail and the other 50%. Yeah, so this is basically a little bit below this first box. You see here,
again, it has the same height, but it has a higher distance from the margin, from the top margin.
Therefore, it follows below this other box. And you have to play around basically with this
information in order to place the box on your screen. It's always given in percentage. So,
it does not differ between screens. It could be squeezed in if the screen is really small,
but it's always given in percentage or relative. So, therefore, you don't have to adjust it to
every computer unless it gets too small so that everything is squeezed.
Okay, so these are the two options. And now we see a bit of more information. This is a standard
item. So, this is just something to describe. We don't have a variable here. We just want to say
that's option two. But here, I played around with the font size and the lookalike of this whole
thing. Actually, it says that the font size now is 22, and it's organized within the column
centered. We will come to that. So, this is the way how you play around with the font size,
with the orientation within the column, and so on. So, this looks a bit nicer than the
default value, but we will come to the design of the whole thing. So, the same applies here,
the same applies here. What is more tricky is this thing here. So, this is a dynamic presentation
of information. So, if I change my lottery, to instance, if I want to test between absolute and
relative risk aversion, then I multiply all the payoffs by 10, let's say, or 1,000.
Then I can just do this here in the background and rerun the whole thing, which is also very
handsome. So, I don't have to change the whole thing. It's not hard coded here that I have to
change things. Everything is dynamically coded. And in the background, the value of my options are
defined. Now, for this, in order to present, I need a dynamic labeling,
which means that I start with this smaller than and larger than signs. These two signs indicate
that now follows a dynamic information. This again here is not important for this dynamic thing.
So, the important thing, this was about the lookalike of the
font size and so on. So, this is about the dynamics. It says,
tala, tala is just the label. But before tala, inside the larger and smaller sign,
you have the information that this is a variable, O2 underscore 1. And this is a straight line
and a 1, meaning that the label, sorry, that the layout of this information is without
just in full integers. Yeah, instead of saying 28 point r, you say, I would like to have 28
displayed. And therefore, you say straight line 1. This means that the layout is just full integers.
And the name of the variable that is displayed is O2 underscore 1. Now, let us go back. We have
defined O2 underscore 1 as 24. And then this is displayed here in option 1. Now, the final thing
here is that I create two outcome variables. Yeah, I have here, sorry, two input variables.
First one, I called option 1. And this is a checkbox. We will come to a systematic display of
what options you have in terms. So far, we only had here layout 1. And then this was a
box where you had to enter a number. Here, it is a checkbox. Yeah, if you want to check me,
then the value of option 1 gets the value 1. If it is checked, then check 1 is check me.
And then the option 1 has the value 1. Otherwise, it has a value of 0. And we have the same thing
for option 2. If you check option 2, if you go for the second option here, then you check this
option here, this checkbox here, and then option 2, option underscore 2, that is the value 1.
Otherwise, it has the value 0. So, this is all the stuff that I do. I know it is quite new fancy
stuff, grid box, check boxes, dynamic information. Just play around with that. It is not high
sophisticated, blah, blah, blah, programming, and so on. You don't have to study this. Just play
around with this. Now, notice the following. This whole lottery is so simple that I can
explain that in basically two sentences. So, I put the instructions for this little part
of my experiment also on the same slide. So, basically, what you have here is now a standard
box. This is at the very top of my screen. So, it only has 10%. It only contains 10% of my screen.
And it starts right at the top of the screen. And it says instructions. And just below that,
I have this here again. This is just, so here I have this mark of that there's a,
actually, we don't need that here. But I will need this information. So, this information says,
in front-side 24, tell me, tell the people what is happening on this page. On this page is we will
toss a coin determining the payoff. Please choose one of the two options. Full stop.
And so, this is the following instruction. And that makes the Grossman-Eckler approach so powerful.
It is just two sentences and you are ready. And then they can choose one of the two options.
And you get a feeling of, you get a not very precise definition of the degree of risk
attitudes. But we know that the people are more or less, in relative terms, risk averse.
Now, once you have done that, this and this option, I need an okay button. Unfortunately,
this is in German here. Okay. So, this is okay. So, I need an okay button. And this okay button is,
of course, arranged at the very bottom of the screen. So, it's only, this standard box is only
6% high. And in the lower corner, there is this okay button. But here is something that is new
for you. Because remember, we had option one and option two. And option one and option two,
the nice thing, you can check both. And this is a check box. You can check one, option one,
and check option two. But you don't want to have that. Or you can uncheck both. What we want to
have is that people can either check either option one or option two. Therefore, attached
to this okay button is a new checker. And the checker checks whether option one and option two
together has the value one. And this is the two equal signs that I mentioned before.
So, you're only allowed to proceed if option one plus option two is one.
And that is, this is what we need. We need all the participants to actually choose one of the two
options. And then there comes some message what happens if not. And it's not so important here.
But the checker option is very nice. I usually do that if I run experiments and I have questions
checking whether people understood the game after being instructed. And then I make an electronic
questionnaire here with these options. And they have to answer certain things. And then I do a
checker whether they answered the right or wrongly. If they all are right, they proceed to the
experiment or they wait for everybody to proceed to the experiment. And then those who cannot really
manage to complete the questionnaire, I can go there and check with them their problems.
So, this is very nice. This checker option, you can apply for several options. And it's activated by
a treatment new checker. And this checker is attached here to this okay button.
Now, what comes now? Something that I do, but it's not necessary. What you could do now,
if you know, and I will explain you how you do that. You could do that the computer does the
random draw because now the full lab did a choice on the two options. And now you have to decide
whether it's toss or tail or toss. Tail or head, I'm sorry. So, the toss of the coin can be, of
course, be done automatically by Z3. So, there's a choice. There's a command called random. And this
gives you a random number between zero and one. If it is lower than 0.5, then you could say this is
a head. Otherwise, it's a tail. And then depending on the choice of the participants, you get a payoff
from this lottery. That's one option. The other option is that for the sake of transparency,
I do a toss of a coin inside the classroom, inside the laboratory. And of course, this is
way more transparent for the people. And this is a way more giving credits to the stuff that you do
in the laboratory. Otherwise, people will say, oh, it was, of course, the case that we got the
lower outcome of the lottery because they tried to save money inside the lab and so on. And so,
in order to be transparent when this is possible, I implemented something here that we are going
to discuss. Of course, if you do a sequence of 10, 20 toss of coin to determine the payout of a
lottery, you can't do this physically in the lab. So, I do this trick here only if it is the right
burden of time to spend in comparison to what I get from that. So, it's always a trade-off whether
you do this physically or not. Sometimes, it's impossible. Sometimes, it's possible. And then,
you have to think. And here, I did that. But before I continue, let me stop here. Otherwise,
we get a too large problem.