This program implements a classic individual choice problem that has
been studied by psychologists for at over 70 years. The subject
must guess which of two random events will occur. The probability of the more
likely event is specified by the experimenter but unknown to the subject, who
learns through repeated trials.
The program also allows specification of a monetary
rewards for correct guesses, and there is hypothetical ("do your best")
treatment option. "Probability matching" describes a
tendency for subjects to choose the more likely event with a probability
that matches the event probability, which is clearly irrational.
| || || || || ||Some economists and psychologists
have found that probability matching behavior is rare when financial incentives are used.
For a discussion of the seminal work of Siegel in the late fifties,
see Chapter 27 of
Holt (2006) Markets, Games, and Strategic Behavior.|
Vecon Lab - September 17, 2014