Instructions

In this experiment you are an investor.

An investor chooses one from eight possible projects. Investors make their choices one after another in random order and there are up to eight investors in one group. Each project can either succeed or fail.

The investor does not know the exact probability with which a project will succeed or fail when choosing it. However, there are only two types of projects:

• Type 1 succeeds with a probability of 75% (meaning it succeeds on average in three out of four cases);
• Type 2 succeeds with a probability of 25% (on average in one out of four cases).

Each type of project is equally likely to occur.

A successful project generates more earnings for an investor than a failed project, the details of which will be explained later. You are always informed about your potential earnings before the project is implemented, but you never know for certain whether it is of the type with a high or a low success probability.

In practice the experiment will be presented to you as follows. Investors choose a project from a screen with eight different projects, as illustrated by the left screenshot below. They do so in random order. Half of the projects are of the type that is more likely to be successful and the other half is of the type that is less likely to be successful, but no nvestor knows which project is of which type. Once all investors have chosen a project, you implement your project by clicking on the box in the right screenshot. You are then told whether your own project was a success or a failure.