questionnaire bf lugano 2014

H. M. Shefrin 2014. All rights reserved. Do not copy or duplicate.

1

QUESTIONNAIRE

Behavioral Finance, University of Lugano

Hersh Shefrin

Below you will find a set of questions to answer. These questions do not constitute a test,

where the objective is to get as many right answers as possible. Rather, these questions

are designed to help identify the way that people think about making judgments and

decisions in the face of risk and uncertainty.

The way to answer these questions is to simply respond as you would if you actually

faced the situations described. There are no grades in the traditional sense.

There is an Excel file named BF Questionnaire answer template.xls for you to record

your answers to this questionnaire. The first thing you should do is save the file with the

filename MY NAME.xls where MY NAME is your name. That way, both you and your

instructor will be able to locate your file easily. When you open the file, you will see that

your name is to be entered in cell H1, and your responses to the questions are to be

entered in column H.

Note: Many of the questions in the questionnaire describe risky alternatives you might

take. In these questions, assume that the outcome of the risky alternative is made known

to you shortly after your choice, that you receive any monies won or lost shortly after the

risky alternative, and that there are no tax consequences attached to these monies.

Important: Please be careful when entering your answers in the Excel answer

template. The answers are numerical, so please be sure to enter your answers as

numbers, not as text. The Excel answer template offers a few reminder comments in

Column B and the occasional text box. If your answer is a percent (%), then enter

the percent sign, to avoid answering, say 15, when you mean 15%. Your answer

templates are collated, so input errors can create distortions. One aspect of a quality

response is avoiding input errors.

Please bring a copy of the questionnaire and your answers with you to

class.

Note: This is a long questionnaire to complete. Do not attempt to complete it in one

go, but break it up into manageable segments. The intent of the questionnaire is to

assess decision style when it comes to making judgments and choices in situations

involving risk and uncertainty.

Please answer question 17 during (but not before) the week beginning Monday,

June 9, 2014, and send the completed questionnaire to me at [email protected] on

or before midnight, Friday, June 13, 2014.


2

1. Below you will find a list of 18 possible events that might happen to you during your

lifetime. Examine the events and answer the questions that appear below.

1 Being fired from a job

2 Your work recognized with award

3 Having gum problems

4 Living past 80

5 Having a heart attack

6 Tripping and breaking bone

7 Being sued by someone

8 No night in hospital for 5 years

9 Victim of mugging

10 Decayed tooth extracted

11 Your achievements in newspaper

12 Weight constant for 10 years

13 Having your car stolen

14 Injured in auto accident

15 In 10 years, earnings greater than $2 million a year

16 Developing cancer

17 Not ill all winter1

18 Deciding you chose wrong career

Please answer the following question: Compared to other people in this class same sex

as you what do you think are the chances that the following will happen to you in the


3

future? The choices range from much less than average, through average, to much more

than average? Note: Enter the number to the left of the category as your answer, not

the category itself. For example, if your answer is 60% less, type 3 as your answer, not

60% less. For some of you, these events might have already happened to you in the

past. If so, simply answer the question in terms of the events happening to you again in

the future. The categories from which you choose are as follows:

1. 100% less (no chance)

2. 80% less

3. 60% less

4. 40% less

5. 20% less

6. 10% less

7. average

8. 10% more

9. 20% more

10. 40% more

11. 60% more

12. 80% more

13. 100% more

14. 3 times average

15. 5 times average


4

2. Below you will find a trivia test consisting of ten questions for you to answer from

memory alone. In addition to giving your best guess, consider a range: a low guess and

a high guess so that you feel 90% confident that the right answer will lie between your

low guess and your high guess. Try not to make the range between your low guess and

high guess too narrow. Otherwise, you will appear overconfident. At the same time, try

not to make the range between your low guess and high guess too wide. This will make

you appear underconfident. If you are well-calibrated, you should expect that only one

out of the ten correct answers you provide does not lie between your low guess and your

high guess.1

After each question, write down three numbers, your best guess, low guess, and high

guess. Do not add words such as miles, etc. to your answer.

1. How old was Martin Luther King when he died?

2. How long, in miles, is the Nile River?

3. How many countries were members of OPEC in 1989?

4. According to the conventional canon, how many books are there in the Hebrew

Bible?

5. What is the diameter, in miles, of the moon?

6. What is the weight, in pounds, of an empty Boeing 747?

7. In what year was Wolfgang Amadeus Mozart born?

1 For readers who use the metric system, note that there are 2.2 pounds in a kilo, 5,280 feet in a mile, and

that 1 km corresponds to 5/8 (0.625) of a mile.


5

8. How long, in days, is the gestation period of an Asian elephant?

9. What is the air distance, in miles, from London to Tokyo?

10. How deep, in feet, is the deepest known point in the ocean?

3. Relative to all the people in the class, how would you rate yourself as a driver?

(1) Above average? (2) Average? (3) Below average? Here average is defined as the

median. Enter a number (1, 2, or 3) in the Excel answer template.

4. Imagine that you are presented with four cards placed flat on a table in front of you.

There is a letter appearing on one side of the card and a number on the other side of the

card. You see the following on the four cards: a, b, 2, and 3.

Suppose you are asked to test the following hypothesis about these four cards: Any card

having a vowel on one side has an even number on the other side. Imagine that you are

asked to select those cards, and only those cards, that will determine whether the

hypothesis is true. That is, please select the minimum number of cards that will enable

you to determine whether or not the hypothesis is true. Of the four cards, which would

you turn over to verify the hypothesis? Indicate your choices by placing a 1 beside

your choices, and a 0 otherwise.

a b 2 3


6

5. Imagine that you hear about a thirty-one year-old woman named Linda, from people

who know her quite well. They tell you that she is single, outspoken, and very bright.

When she was a student, she was deeply concerned with issues of social justice. Linda's

friends neglect to tell you about her current interests and career. Consider the following

eight choices.

1. Linda is a teacher in an elementary school.

2. Linda manages a bookstore, and takes Yoga classes.

3. Linda is active in the women's movement.

4. Linda is a psychiatric social worker.

5. Linda is a member of the League of Women Voters.

6. Linda is a bank teller.

7. Linda is an insurance salesperson.

8. Linda is a bank teller, and is active in the women's movement.

Rank these possibilities about Linda from 1 to 8 by assigning 1 to what you regard

as the most likely possibility, and 8 to what you regard as the least likely possibility.


7

6. Please answer the following three questions:

6.1. Record the last three digits of your home phone number?

6.2. Add 400 to the last three digits of your home phone number. Call the sum X.

Without looking up the answer anywhere, do you think that Attila the Hun was defeated

in Europe before or after the year X? (Before = 1, After = 2)

6.3. Without looking up the answer anywhere, provide your best guess about the actual

year that Attila the Hun was defeated in Europe?

7. You will answer either 7.2 or 7.3, depending on the date of your birthday.

7.1. Is the date of your birthday an even number or an odd number? (For example, if your

birthday falls on January 2, enter a 0 for even. Enter a 1 for odd.)

If the date of your birthday is an even number, answer question 7.2. If the date of your

birthday is an odd number skip this section and continue with question 7.3.

7.2. Imagine that you are offered the opportunity to participate in a baseball pool. The

pool works as follows. Imagine that in front of you lies a pile of 227 baseball cards, with

the face of each card displaying the picture of a different baseball player. Indeed, imagine


8

that there are two identical piles in front of you, each containing 227 baseball cards. The

organizer of the pool asks you to look through the pile, select one card, and show it to

him. After you have done so, the organizer looks through the second (duplicate) pile,

finds the twin of the card you selected, and deposits the twin into a brown cardboard

carton. In order to participate, you pay $1 to a pool organizer for each card you select.

After all the cards have been sold, there will be 227 cards in the organizers carton, of

which one will be yours. The organizer will then draw exactly one card from the carton.

The owner of the winning card receives a $50 prize.

Suppose that all the cards have been sold, but the drawing has yet to take place.

The pool organizer approaches you to say that someone who really wanted to participate

can't, because all the cards have been sold. He asks you how much you would be willing

to accept in exchange for the card you drew. What is the minimum amount you would ask

to give up your card?

7.3. If the date of your birthday is an odd number answer the following question. If the

date of your birthday is an even number you should have answered question 7.2 and

should also skip this section and continue with question 8.

Imagine that you are offered the opportunity to participate in a baseball pool. The pool

works as follows. Imagine that in front of you lies a pile of 227 baseball cards, with the

face of each card displaying the picture of a different baseball player. Indeed, imagine

that there are two identical piles in front of you, each containing 227 baseball cards. The


9

organizer of the pool has flipped through the pile, selected one card, and given it to you.

After having done so, the organizer looks through the second (duplicate) pile, finds the

twin of the card she selected, and deposits the twin into a brown cardboard carton. In

order to participate, you pay $1 to a pool organizer for the card you select. After all the

cards have been sold, there will be 227 cards in the organizers carton, of which one will

be yours. The organizer will then draw exactly one card from the carton. The owner of

the winning card receives a $50 prize.

Suppose that all the cards have been sold, but the drawing has yet to take place.

The pool organizer approaches you to say that someone who really wanted to participate

can't, because all the cards have been sold. He asks you how much you would be willing

to accept in exchange for the card you drew. What is the minimum amount you would ask

to give up your card?

8. Suppose that a university is attempting to predict the grade point average (GPA) of

some graduating students based upon their high school GPA levels. As usual, a students

GPA lies between 0 and 4. Below are some data for undergraduates at Santa Clara

University, based on students who entered the university in the years 1990, 1991, and

1992. During this period, the mean high school GPA of students who entered as freshmen

and graduated was 3.44 (standard deviation was 0.36). The mean college GPA of those

same students was 3.08 (standard deviation 0.40). Suppose that it is your task to predict

the college GPA scores of 3 graduating students, based solely on their high school GPA


10

scores. The 3 high school GPAs are 2.2, 3.0, and 3.8. Write down your prediction below

for the college GPAs of these students upon graduation.

Prediction of Graduation GPA of student with high school GPA of 2.2 = ______



9: Question 1 pertains to a series of possible life events. Please assess each of these

events on the following criteria:

9.1. For each of the life events, assign one of the following controllability category

numbers (1 through 5).

1. There is nothing one can do that will change the likelihood that the event will take

place.

2. There are things one can do to have a small effect on the chances that the event

will occur.

3. There are things one can do to have a moderate effect on the chances that the

event will occur.

4. There are things one can do to have a large effect on the chances that the event

will occur.

5. The event is completely controllable.


11

9.2. For each of the life events, assign a desirability number on a scale of 1 to 9 where

1 = extremely undesirable

3 = undesirable

5 = neutral

7 = desirable

9 = extremely desirable

9.3. For each of the life events, assign a category number for familiarity, where the

categories are:

1. The event has not happened to anyone I know.

2. The event has happened to acquaintances.

3. The event has happened to friends or close relatives.

4. The event happened to me once.

5. The event has happened to me more than once.

9.4. For each of the life events, assign a category number for mental imaging, where the

categories are:

1. No particular person with a high chance comes to mind.


12

2. When I think about the event, a type of person comes to mind to whom it is likely

to happen, but this image is not very clear.

3. When I think about the event, a clear picture comes to mind of a particular type of

person to whom it is likely to happen.

10. Imagine that you are given the opportunity to play a 50-50 risky alternative whose

outcome will be determined by the toss of a coin. If the coin toss comes up tails, you lose

$500. If the coin toss comes up heads, you win $5,000. You can choose to accept the

risky alternative, or you can choose to reject the risky alternative.

10.1 Would you accept or reject the 50-50 risky alternative where you either lose $500 or

win $5,000? (Accept = 1, Reject = 0)

10.2 Imagine a 50-50 risky alternative where you lose $500 if the coin toss comes up

tails, but win a different amount if the coin toss turns up heads. What is the lowest

amount you would have to win in this risky alternative and yet still accept the risky

alternative? For example, if you accepted the 50-50 risky alternative between winning

$5,000 and losing $500, would you still be willing to accept if the risky alternative was

between winning $2,500 and losing $500? If you answer yes, would you still be willing

to accept if the risky alternative was between winning $1,250 and losing $500? In other

words, think about how low your win would have to be before you were indifferent


13

between accepting and rejecting the opportunity to face the risky alternative. Enter the

lowest acceptable winning amount in your Excel answer template.

11. Imagine that you face the following pair of concurrent decisions. Think of making

your choices in the morning, with the outcome to the first decision being determined in

the afternoon, and the outcome of the second decision being determined in the evening.

Imagine that the current time is morning. First examine both decisions, and then indicate

the option you prefer.

First decision: Choose between

A. a sure gain of $2,400

B. 25% chance to gain $10,000 and 75% chance to gain nothing.

a. Second decision: Choose between

C. a sure loss of $7,500

D. 75% chance to lose $10,000 and 25% chance to lose nothing

Indicate your choices by placing a 1 beside your choices in the Excel answer

template, and a 0 otherwise.

In plain English, explain your thought process in answering this question. Your

explanation should be intelligible to someone like an intelligent fellow student. Enter

your answer in the tab Text Box that is in the Excel spreadsheet.


14

12. Consider the danger of death or injury stemming from four sources, all involving

water:

1. shark attacks

2. hurricanes

3. riptides

4. floods

Which item in the above list involves the most danger to people? (Note: Enter the

number of the item.)

13. Consider different categories of tasks for which you have deadlines. On average, how

many hours before each deadline do you typically complete these types of tasks? (Use

minus numbers if you typically complete the task after the deadline). The task categories

are below:

1. school assignments

2. everyday tasks around the home

3. holiday shopping

4. completing income tax returns


15

14. Consider the same four categories of tasks as in question 13. On average, how

accurate are you in predicting when you will complete these tasks, relative to your plans?

The task categories are:

1. school assignments

2. everyday tasks around the home

3. holiday shopping

4. completing income tax returns

In answering this question, enter a number between -2 and +2 where -2 is much

earlier than predicted , -1 is earlier than predicted, 0 is as predicted, +1 is later than

predicted and +2 is much later than predicted.

15. Consider breast cancer screening using mammography which is conducted in your

region. You know the following information about women in this region:

The probability that a woman has breast cancer is 1%.

If a woman has breast cancer, the probability that she tests positive is 90%.

If a woman does not have breast cancer, the probability that she nevertheless

tests positive is 9%.


16

A woman tests positive. She wants to know from you what the chances are she has breast

cancer. In the Excel answer template, enter your answer, and remember to use a %

sign because your answer is a probability.

16. Imagine that you have a choice among two alternatives. Your first alternative is to

accept $150 immediately. Your second alternative is to accept possibly a different

amount of money at a future date.

1. If you had to wait one month, instead of receiving $150 immediately, what is the

lowest amount of money that you would consider accepting?

2. If you had to wait 12 months, instead of receiving $150 immediately, what is the


3. If you had to wait 10 years, instead of receiving $150 immediately, what is the lowest

amount of money that you would consider accepting?





17

17. (To be completed the week of June 9). Below you will find a list of 10 companies.

You will also find Yahoo links to online sources for information about these companies

as a separate tab in the Excel answer template file called Yahoo links. For each

company, please answer the following five questions, placing your answers in the answer

template.

1. On a scale of 0 to 10 how would you rate the quality of the company, where 0 is worst

and 10 is best?

2. On a scale of 0 to 10 how would you rate the company in terms of financial soundness,

where 0 is insolvent and 10 is solid as a rock?

3. On a scale of 0 to 10 how would you rate the companys stock in regard to value as a

long-term investment, where 0 is no value and 10 is extremely high value?

4. What percentage rate of return would you expect to earn on the companys stock if you

held it for one year? NOTE: Please type in the number followed by the %-sign.

5. On a scale of 0 to 10, where 0 is risk-free and 10 is extremely speculative, how would

you rate the riskiness of the companys stock?

The 10 companies, with ticker symbols in parentheses are:

1. Facebook (FB)

2. BlackBerry (BBRY)

3. Hewlett-Packard (HPQ)

4. Unisys (UIS)

5. Microsoft (MSFT)

6. JPMorgan Chase (JPM)

7. Intel (INTC)


18

8. Twitter (TWTR)

9. eBay (EBAY)

10. Wal Mart (WMT)



your answer in the tab Text Box that is in the Excel spreadsheet. You do not have to

describe what you did for all ten stocks. However, it would be good to describe your

general approach, and to pick some examples to describe how you came up with the

answers you did.

18. A company uses a first pass quality assurance test for its products. Below are data

relevant to the testing process.

Ten out of every 1,000 items are defective.

Of these 10 items, the test indicates that 9 are defective.

Of the 990 items that are free of defects, the test indicates that about 89 are

defective.

If the test identifies an item as defective, a more detailed (second pass) screening test is

used to ascertain with certainty whether the item is indeed defective. Suppose that the

first pass test identifies a particular item as defective. Identify a whole number X in

connection with the sentence About 1 in X items that are identified as defective by the

first past test actually turn out to be defective. Enter your answer (a whole number) in

the Excel answer template.

19. Imagine that you are in a contest. As your contest entry, choose a whole number

between 0 and 100. The winner will be the person whose choice comes closest to two-

thirds of the average entry.


19

20. Imagine that you have a choice among two alternatives. Your first alternative is to

accept $150 in exactly 12 months. Your second alternative is to accept possibly a

different amount of money at a future date that goes beyond 12 months.

1. If you had to wait 13 months, instead of receiving $150 in 12 months, what is the


2. If you had to wait 24 months, instead of receiving $150 in 12 months, what is the


3. If you had to wait eleven years, instead of receiving $150 in 12 months, what is the





21. Imagine a situation where you have an opportunity to choose from among six

different funds. These funds have to be held for a period of one year. The six charts that

appear on the following pages provide the probability distribution for what the funds will

be worth after you have held them for a year. Examine all six charts and then answer the

following questions. You will also see a table that shows the mean, variance, and

standard deviation for what each fund will be worth after a year. The funds are named as

follows:


20

1. Risk Floor

2. Short Shot

3. Peaked

4. Uniform

5. Bimodal

6. Long Shot

1. Suppose that you are to receive part of your bonus in the form of one of these

funds. Rank order the funds from top to bottom, by placing a 1 beside the fund you

regard as the best, a 2 beside the fund you regard as second best, etc. Then, in plain

English, explain your thought process in answering this question. Your explanation

should be intelligible to someone like an intelligent fellow student. Enter your answer in

the tab Text Box that is in the Excel spreadsheet.

2. Imagine yourself as the owner of one of these funds, which you received as part

of your bonus. If you were asked to sell the fund, what is the minimum price (WTA) you

would accept in order to give it up? (Think about owning each of the six funds in turn.

That is, provide six different values when answering this question, one beside each fund.)

Then in plain English, explain your thought process in answering this question. Your




21

3. Now suppose that instead of receiving funds as part of your bonus, you have to

buy the funds instead. Write down the maximum amount (WTP) you would be willing to

pay to purchase each of the six funds. Then, in plain English, explain your thought

process in answering this question. Your explanation should be intelligible to someone

like an intelligent fellow student. Enter your answer in the tab Text Box that is in the

Excel spreadsheet.

4. If these were the only funds you could use to build your personal portfolio, and

you have $250,000 to invest, what percentage of your wealth would you invest in each?

Please make sure the percentages add up to 100%. In this respect, a share of each fund

costs $1000, and the charts below pertain to the future value of a single share after one

year. Then, in plain English, explain your thought process in answering this question.

Your explanation should be intelligible to someone like an intelligent fellow student.

Enter your answer in the tab Text Box that is in the Excel spreadsheet.

5. Assuming that instead of receiving funds as part of your bonus, you have to buy the

funds instead. For each fund, what is the minimum (annual) expected return, expressed as

a percentage, you feel you would require in order to be willing to buy that fund, and hold

it for a year? Because there are six funds, your answer will consist of six minimum

required returns. Then, in plain English, explain your thought process in answering this

question. Your explanation should be intelligible to someone like an intelligent fellow

student. Enter your answer in the tab Text Box that is in the Excel spreadsheet.


22

For your hardcopy, place the answers to the above questions below each graph, noting the

question number.

The table below provides data describing the expected dollar payoff (Mean) for each

fund. The columns for Variance and Stdev provide the variance and standard deviation

for the dollar payoff of each fund.

The histogram charts depicting the probabilities associated with the various payoffs

appear on the next pages.

Examine each chart carefully before answering the various parts of this question.

Fund Name Mean Variance Stdev

1 Risk Floor $1,100 $125,434 $354

2 Short Shot $1,100 $125,434 $354

3 Peaked $1,100 $195,637 $442

4 Uniform $1,100 $444,214 $666

5 Bimodal $1,100 $724,922 $851

6 Long Shot $1,100 $1,403,741 $1,185


23

Short Shot

0

5

10

15

20

25

30

35

$0 $143 $308 $473 $627 $781 $946 $1,111 $1,265 $1,430

Payoff

Pro

ba

bil

ity

(%

)

Risk Floor

0

5

10

15

20

25

30

35

$770 $935 $1,089 $1,254 $1,419 $1,573 $1,727 $1,892 $2,057 $2,200

Payoff

Pro

ba

bil

ity

(%

)


24

Peaked

0

5

10

15

20

25

30

35

$0

$1

43

$2

86

$4

40

$5

83

$7

26

$8

80

$1

,02

3

$1

,16

6

$1

,30

9

$1

,45

2

$1

,60

6

$1

,74

9

$1

,89

2

$2

,04

6

$2

,20

0

Payoff

Pro

ba

bil

ity

(%

)

Uniform

0

5

10

15

20

25

30

35

$0

$110

$231

$352

$462

$572

$693

$814

$924

$1,0

34

$1,1

55

$1,2

76

$1,3

86

$1,4

96

$1,6

17

$1,7

38

$1,8

48

$1,9

58

$2,0

79

$2,2

00

Payoff

Pro

bab

ilit

y (

%)


25

Bimodal

0

5

10

15

20

25

30

35

$0

$1

43

$2

86

$4

40

$5

83

$7

26

$8

80

$1

,02

3

$1

,16

6

$1

,30

9

$1

,45

2

$1

,60

6

$1

,74

9

$1

,89

2

$2

,04

6

$2

,20

0

Payoff

Pro

ba

bil

ity

(%

)

Long Shot

0

5

10

15

20

25

30

35

$0 $539 $1,078 $1,606 $2,145 $2,684 $3,212 $3,751 $4,290 $4,829

Payoff

Pro

ba

bil

ity

(%

)


26

SM

22. For each of the following statements, please indicate the degree to which you believe

it is reflective of your own behavior. Please respond by circling the number that best

reflects how true you think each statement is about you.

1 = Certainly, always false

2 = Generally false

3 = Somewhat false, but with exception

4 = Somewhat true, but with exception

5 = Generally true

6 = Certainly, always true

1. In social situations, I have the ability to alter my behavior if I feel something else is called for. 1 2 3 4 5 6 2. I am often able to read people's true emotions correctly through their eyes. 1 2 3 4 5 6 3. I have the ability to control the way I come across to people depending on the impression I wish to give them. 1 2 3 4 5 6 4. In conversations, I am sensitive to even the slightest change in the facial expression of the person I am conversing with. 1 2 3 4 5 6 5. When I feel that the image I am portraying isn't working, I can readily change to something that does. 1 2 3 4 5 6 6. My powers of intuition are quite good when it comes to understanding others' emotions and motives. 1 2 3 4 5 6 7. I have trouble changing my behavior to suit different people and different situations. 1 2 3 4 5 6 8. I can usually tell when others consider a joke to be in bad taste, even though they may laugh convincingly. 1 2 3 4 5 6 9. I have found that I can adjust my behavior to meet the requirements of any situation I find myself in. 1 2 3 4 5 6 10. I can usually tell when I've said something inappropriate by reading it in the listener's eyes. 1 2 3 4 5 6 11. Even when it might be to my advantage, I have difficulty putting up


27

a good front. 1 2 3 4 5 6 12. If someone is lying to me, I usually know it at once from that person's manner of expression. 1 2 3 4 5 6 13. Once I know what the situation calls for, it's easy for me to regulate my actions accordingly. 1 2 3 4 5 6


28

DC 23. Below you will find a series of statements. Please read each statement carefully and respond to it by expressing the extent to which you believe the statement applies to you. For all items, a response from 1 to 7 is required. Use the number that best reflects your belief with the scale defined as follows: 1 = The statement does not apply to me at all. 2 = The statement usually does not apply to me. 3 = Most often, the statement does not apply 4 = I am unsure about whether or not the statement applies to me or it applies to me about half the time. 5 = The statement applies more often than not. 6 = The statement usually applies to me. 7 = The statement always applies to me. 1. I prefer a job where I have a lot of control over what I do and when I do it. 1 2 3 4 5 6 7 2. I enjoy political participation because I want to have as much of a say in running government as possible. 1 2 3 4 5 6 7 3. I try to avoid situations where someone else tells me what to do. 1 2 3 4 5 6 7 4. I would prefer to be a leader than a follower. 1 2 3 4 5 6 7 5. I enjoy being able to influence the actions of others. 1 2 3 4 5 6 7 6. I am careful to check everything on an automobile before I leave for a long trip. 1 2 3 4 5 6 7 7. Others usually know what is best for me. 1 2 3 4 5 6 7 8. I enjoy making my own decisions. 1 2 3 4 5 6 7 9. I enjoy having control over my own destiny. 1 2 3 4 5 6 7 10. I would rather someone else take over the leadership role when I'm involved in a group project. 1 2 3 4 5 6 7 11. I consider myself to be generally more capable of handling situations than others are. 1 2 3 4 5 6 7


29

12. I'd rather run my own business and make my own mistakes than listen to some else's orders. 1 2 3 4 5 6 7 13. I like to get a good idea of what a job is all about before I begin. 1 2 3 4 5 6 7 14. When I see a problem, I prefer to do something about it rather than sit by and let it continue. 1 2 3 4 5 6 7 15. When it comes to orders, I would rather give them than receive them. 1 2 3 4 5 6 7


30

DC pg 2 1 = The statement does not apply to me at all. 2 = The statement usually does not apply to me. 3 = Most often, the statement does not apply 4 = I am unsure about whether or not the statement applies to me or it applies to me about half the time. 5 = The statement applies more often than not. 6 = The statement usually applies to me. 7 = The statement always applies to me. 16. I wish I could push many of life's daily decisions off on someone else. 1 2 3 4 5 6 7 17. When driving, I try to avoid putting myself in a situation where I could be hurt by another person's mistake. 1 2 3 4 5 6 7 18. I prefer to avoid situations where someone else has to tell me what it is I should be doing. 1 2 3 4 5 6 7 19. There are many situations in which I would prefer only one choice rather than having to make a decision. 1 2 3 4 5 6 7 20. I like to wait and see if someone else is going to solve a problem so that I don't have to be bothered with it. 1 2 3 4 5 6 7


31

SA 24. Please read the following statements and indicate the extent to which each describes you. Indicate your answers on the following 5-point scale 1 = Not at all characteristic 2 = Slightly characteristic 3 = Moderately characteristic 4 = Very characteristic 5 = Extremely characteristic 1. I often feel nervous even in casual get-togethers. 1 2 3 4 5 2. I usually feel uncomfortable when I am in a group of people I don't know. 1 2 3 4 5 3. I am usually at ease when speaking to a member of the opposite sex. 1 2 3 4 5 4. I get nervous when I must talk to a teacher or boss. 1 2 3 4 5 5. Parties often make me feel anxious and uncomfortable. 1 2 3 4 5 6. I am probably less shy in social interactions than most people. 1 2 3 4 5 7. I sometimes feel tense talking to people of my own sex if I don't them very well. 1 2 3 4 5 8. I would be nervous if I were being interviewed for a job. 1 2 3 4 5 9. I wish I had more confidence in social situations. 1 2 3 4 5 10. I seldom feel anxious in social situations. 1 2 3 4 5 11. In general, I am a shy person. 1 2 3 4 5 12. I often feel nervous when talking to an attractive member of the opposite sex. 1 2 3 4 5 13. I often feel nervous when calling someone I don't know very well on the telephone. 1 2 3 4 5


32

14. I get nervous when I speak to someone in a position of authority. 1 2 3 4 5 15. I usually feel relaxed around other people, even people who are quite different from me. 1 2 3 4 5


33

AF 25. This scale consists of a number of words that describe different feelings and emotions. Read each item and then mark the appropriate answer in the space next to that word. Indicate to what extent you generally feel this way, that is, how you feel on the average. Use the following scale to record your answers. 1 2 3 4 5 very slightly a little moderately quite a bit extremely or not at all ____ interested ____ irritable ____ distressed ____ alert ____ excited ____ ashamed ____ upset ____ inspired ____ strong ____ nervous ____ guilty ____ determined ____ scared ____ attentive ____ hostile ____ jittery ____ enthusiastic ____ active ____ proud ____ afraid


34

WB 26. Below you will find a series of statements a person might use to describe his or her attitudes, opinions, interests, and other characteristics. Please decide whether, for each statement, the true or false choice best describes you. Please answer every statement, even if you are not completely sure of the answer, by entering 1 for true and 2 for false. Read each statement carefully, but do not spend too much time deciding on the answer. 1. It is easy for me to become enthusiastic about things I am doing True False 2. My mood often goes up and down True False 3. I always seem to have something pleasant to look forward to. True False 4. I suffer from nervousness. True False 5. I often feel happy and satisfied for no particular reason. True False 6. Often I get irritated at little annoyances. True False 7. I sometimes change from happy to sad, or vice versa, without good reason. True False 8. Every day I do some things that are fun. True False 9. I often find myself worrying about something. True False 10. I usually find ways to liven up my day. True False 11. There are days when I'm "on edge" all of the time. True False 12. I am too sensitive for my own good. True False 13. Most days I have moments of real fun or joy. True False 14. My feelings are hurt rather easily. True False 15. In my spare time I usually find something interesting to do. True False 16. I sometimes feel "just miserable" for no good reason. True False 17. For me life is a great adventure. True False 18. Occasionally I experience strong emotions--anxiety, anger--without really knowing what causes them. True False 19. I often lose sleep over my worries. True False 20. Every day interesting and exciting things happen to me. True False


35

21. Minor setbacks sometimes irritate me too much. True False 22. I often feel sort of lucky for no special reason. True False 23. I sometimes get myself into a state of tension and turmoil as I think of the day's events. True False 24. I am easily startled by things that happen unexpectedly. True False 25. I live a very interesting life. True False


36

OP 27. Please indicate the extent to which you agree with each of the following statements. Use the following scale for your responses. 1 = Strongly disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree 1. In uncertain times, I usually expect the best. 1 2 3 4 5 2. If something can go wrong for me, it will. 1 2 3 4 5 3. I always look on the bright side of things. 1 2 3 4 5 4. I'm always optimistic about my future. 1 2 3 4 5 5. I hardly ever expect things to go my way. 1 2 3 4 5 6. Things never work out the way I want them to. 1 2 3 4 5 7. I am a believer in the idea that "every cloud has a silver lining." 1 2 3 4 5 8. I rarely count on good things happening to me. 1 2 3 4 5


37

SPA 28. Below you will find a series of statements. Please read each statement carefully and respond to it by expressing the extent to which you believe the statement applies to you. For all items, a response from 1 to 7 is required. Use the number that best reflects your belief with the scale defined as follows: 1 = The statement does not apply to me at all. 2 = The statement usually does not apply to me. 3 = Most often, the statement does not apply 4 = I am unsure about whether or not the statement applies to me or it applies to me about half the time. 5 = The statement applies more often than not. 6 = The statement usually applies to me. 7 = The statement always applies to me.

1. When I am in a situation where the outcome is uncertain, the emotion I feel the most intensely is fear.

2. When I am in a situation where the outcome is uncertain, the emotion I

feel the most intensely is hope.

3. When I am in a situation where the outcome is uncertain, I usually feel cautiously hopeful.

4. When I am in a situation where the outcome is uncertain, I usually have a

target outcome in mind which defines success for me.

5. When I am in a situation where the outcome is uncertain, my major

concern is avoiding as unfavorable an outcome as possible.


concern is to achieve as favorable an outcome as possible.


concern is to maximize the odds of my achieving an outcome that I would characterize as success.


38

8. I am comfortable taking a risk where there is a small but reasonable chance of an extremely favorable outcome as long as the downside is not too unfavorable.

9. I am comfortable taking a risk where there is a small but reasonable chance of an extremely favorable outcome even if the downside is quite unfavorable.

10. I prefer taking small risks to large risks because the downside looms much

larger for me than the upside.

11. I prefer taking large risks to small risks because the upside looms much larger for me than the downside.

12. When I am in a situation where the outcome is uncertain, missing my goal

causes me great pain.

13. When I am in a situation where the outcome is uncertain, I would be willing to take a little more risk on the downside if doing so would increase the chances of achieving my goal.

14. When I am in a situation where the outcome is uncertain, I would be

willing to lower the odds of achieving an extremely favorable outcome, if doing so would increase the chances of achieving my goal.

15. When I am in a situation where the outcome is uncertain, I would be

willing to increase the odds of achieving an extremely unfavorable outcome, if doing so would increase the chances of achieving my goal.

16. When Im in a situation that can only turn out well I am willing to take

more risk than usual.

17. When Im in a situation that can only turn out badly I am willing to take more risk than usual.

18. When Im in a situation where just a little bit of bad luck will result in a disaster, I try to take as little risk as possible.

19. When Im in a situation where a moderate amount of bad luck will result in a disaster, I am willing to take more risk than when a little bit of bad luck will result in a disaster.


39

20. When Im in a situation where a reasonably ambitious goal I am trying to achieve is within reach, and a little bit of good luck will result in the achievement of my goal, I am willing to take a fair amount of risk.

21. When Im in a situation where a reasonably ambitious goal I am trying to achieve is within reach, and but will require a moderate amount of good luck, I am willing to take more risk than when a situation where just a little bit of good luck is all that I need to achieve my goal.

22. When Im in a situation where I have achieved a reasonably ambitious goal that I aimed for, but just a little bit of bad luck will result in my falling short of that goal, I try to take as little risk as possible.

23. When Im in a situation where I have achieved a reasonably ambitious goal that I aimed for, and it would take a moderate amount of bad luck to result in my falling short of that goal, I am willing to take more risk than when just a little bit of bad luck will result in my falling short of that goal.

24. When I am in a situation where a moderate amount of bad luck would be required to cause disaster, but at the same time I am quite far away from achieving a reasonably ambitious goal, my focus is on avoiding disaster.

25. When I am in a situation where a moderate amount of bad luck would be required to cause disaster, but at the same time I am quite far away from achieving a reasonably ambitious goal, I am willing to take a lot of risk.


40

Question 29

Imagine 100 book bags, each of which contains 1,000 poker chips. 45 bags

contain 700 black chips and 300 red chips. The other 55 bags contain 300 black

chips and 700 red chips. You cannot see inside any of the bags. One of the bags is

selected at random by means of a coin toss.

Consider the following three questions about the book bag.

29a. What probability would you assign to the event that the selected bag contains

predominantly black chips?

Probability = ______________%

29b. Now imagine that 12 chips are drawn, with replacement, from the selected bag.

These twelve draws produce 8 blacks and 4 reds. Would you use the new

information about the drawing of chips to revise your probability that the selected

bag contains predominantly black chips? If so, what new probability would you

assign?

Probability = ______________%

29c. In addition to giving your best probability estimate in 29b, consider a range: a

low estimate and a high estimate so that you feel 90% confident that the right

answer will lie between your low estimate and your high estimate. Try not to

make the range between your low estimate and high estimate too narrow.

Otherwise, you will appear overconfident. At the same time, try not to make the

range between your low estimate and high estimate too wide. This will make you

appear underconfident. If you are well-calibrated, you should expect the true

probability to lie outside the range between your low estimate and your high

estimate one time in ten.

Low estimate = __________% High estimate = ___________%





41

30. Suppose that you face a choice between two situations, designated 30.1 and 301.2.

Which would you prefer? Enter 1 for 30.1 and 2 for 30.2.

30.1: 90% chance of winning $2000

10% chance of zero.


55% chance of zero.

In plain English, explain your thought process in making this choice. Your explanation

should be intelligible to someone like an intelligent fellow student. There is an entry in

column H of the tab Answer Template for your response to this question. However, if

your response is too long, you can also record your answer in the tab Text Box, being

sure to identify the number of the question. Similar remarks about using Text Box apply

to all the remaining questions below that begin In plain English

31. Suppose that you face a choice between two situations, designated 31.1 and 31.2.

Which would you prefer? Enter 1 for 31.1 and 2 for 31.2.

31.1: $2000 with probability .002

0 with probability .998




should be intelligible to someone like an intelligent fellow student.


42

32. Choose between A and B (circle your choice on the hard copy, and enter 1 for A or 2 for B in the spreadsheet table), where

A = a guaranteed loss of $750

B = 25% chance to lose nothing, 75% chance to lose $1000


should be intelligible to someone like an intelligent fellow student. Then, as part of your

answer, explain whether your response to this question would be different if the stakes

were larger by a factor of 10 and 100 respectively, and smaller by 1/10 the size and 1/100

the size respectively. Important: If there is a stake size scaling factor that would leave

you indifferent between the two choices, please indicate its value as part of your answer.

33. Imagine that you face the following choice. You can accept a guaranteed $1,500 or accept a stylized risk. The outcome of the stylized risk is determined by the toss of a

fair coin. If heads comes up, you win $1,950. If tails comes up, you win $1,050.

Which would you choose?

C = the guaranteed $1,500

D = the 50-50 risk of winning $1,950 or winning $1,050

Enter 1 for C and 2 for D in the Excel answer sheet. In plain English, explain your

thought process in making this choice. Your explanation should be intelligible to

someone like an intelligent fellow student.

34. Imagine that you face the following choice. You can accept a guaranteed loss of $750 or accept a stylized risk. The outcome of the stylized risk is determined by the toss of

a fair coin. If heads comes up, you lose $525. If tails comes up, you lose $975. Which

would you choose?

E = the guaranteed loss of $750

F = the 50-50 risk of losing $525 or losing $975

Enter 1 for E and 2 for F in the Excel answer sheet. In plain English, explain your thought

process in making this choice. Your explanation should be intelligible to someone like an

intelligent fellow student.


43

35. Imagine that you are in a situation where 75% of the time you lose $760. And 25% of the time you win $240. Its an unavoidable risk you have to take. Now I give you a choice. Which would you choose?

G = face the risk I just described and in addition Ill give you $10

H = face the risk I just described and instead of giving you $10, Ill give you $0

Enter 1 for G and 2 for H in the Excel answer sheet. In plain English, explain your



36. This question concerns how your attitude to risk depends on other aspects of your financial situation. Imagine that you have just won $1,500 in one stylized lottery, and

have the opportunity to participate in a second stylized lottery. The outcome of the

second lottery is determined by the toss of a fair coin. If heads comes up, you win

$450 in the second lottery. If tails comes up, you lose $450. Which would you

choose?

I = accept the 50-50 risk of winning $450 or losing $450

J = reject the 50-50 risk of winning $450 or losing $450

Enter 1 for I and 2 for J in the Excel answer sheet. In plain English, explain your thought

process in making this choice. Your explanation should be intelligible to someone like an

intelligent fellow student.

37. Imagine that you have just lost $750 in one stylized lottery, but have the opportunity to participate in a second stylized lottery. The outcome of the second lottery is

determined by the toss of a fair coin. If heads comes up, you win $225 in the second

lottery. If tails comes up, you lose $225. Which would you choose?

K = accept the 50-50 risk of winning $225 or losing $225

L = reject the 50-50 risk of winning $225 or losing $225


44

Enter 1 for K and 2 for L in the Excel answer sheet. In plain English, explain your



38. Consider a decision task featuring choice from a set of two alternatives M and N with the same expected payoffs. Which would you choose?

M = a sure loss of $500

N = a 50-50 risk where you will either lose $1000 or lose $0

Enter 1 for M and 2 for N in the Excel answer sheet. In plain English, explain your


someone like an intelligent fellow student. Then, as part of your answer, explain whether

your response to this question would be different if the stakes were larger by a factor of

10 and 100 respectively, and smaller by 1/10 the size and 1/100 the size respectively.

Important: If there is a stake size scaling factor that would leave you indifferent between

the two choices, please indicate its value as part of your answer.

39. Consider a decision task featuring choice from a set of two alternatives O and P with the same expected payoffs. Which would you choose?

O = a sure loss of $500

P = a 2:1 risk where you will either lose $1000 with probability 1/3 or lose $250 with probability 2/3

Enter 1 for O and 2 for P in the Excel answer sheet.


should be intelligible to someone like an intelligent fellow student. Then, as part of your

answer, explain whether your response to this question would be different if the stakes

were larger by a factor of 10 and 100 respectively, and smaller by 1/10 the size and 1/100

the size respectively. Important: If there is a stake size scaling factor that would leave

you indifferent between the two choices, please indicate its value as part of your answer.


45

40. This question concerns how your attitude to risk depends on other aspects of your financial situation. Imagine that you have just won $1,500 in one stylized lottery, and

have the opportunity to participate in a second stylized lottery. The outcome of the

second lottery is determined by the toss of a fair coin. If heads comes up, you win

$1,550 in the second lottery. If tails comes up, you lose $1,550. Which would you

choose?

Q = accept the 50-50 risk of winning $1,550 or losing $1,550

R = reject the 50-50 risk of winning $1,550 or losing $1,550

Enter 1 for Q and 2 for R in the Excel answer sheet. In plain English, explain your



41. Opening a new restaurant is risky. Suppose that you were assessing the various ways

that a once profitable restaurant might go out of business. One possible way this might

happen is that revenues fall. Another possibility is that costs increase. Of course, both

might happen, but for the purpose of this question, assume that only one happens but not

the other. In the figure below, you will find a fault tree that describes various possible ways that this might happen, including an all other category at the bottom. Write down your best guess for the conditional probability attached to each branch. For example,

notice that there are only two possible ways the revenues can decrease, decreasing

customers and decreasing checks per customer. Assuming that both do not occur at once,

the sum of the two conditional probabilities should add up to 100%. Hence, the

probability you would attach to Decreasing Number of Customers is conditional on the restaurant failing because of Decreasing Revenues. For example, if you assigned a 60% probability to Decreasing Number of Customers, then you would assign a 40% probability to Decreasing Average Food/Beverage Check. Similarly, the probabilities under Decreasing Number of Customers should sum to 100%, as these probabilities are conditional on the event Decreasing Number of Customers. That is, the probabilities of the events beginning with Incorrect Pricing and ending with All Other should sum to 100%. Similar statements hold for all five columns in the figure below. Fill in the

probabilities, remembering to include the probability of any reason not specifically listed

in the All Other category.

See figure next page.


46

FAULT TREE FOR RESTAURANT

Restaurant

Failure Due to

Decreasing

Profits

Decreasing

Revenues

Increasing

Costs

Decreasing

Number of

Customers

Decreasing

Average

Food/Beverage

Check

Increasing Food

Costs

Increasing

Labor Costs

Increasing Overhead

Costs

Incorrect

Pricing

Decreasing

Perceived Value by

Customers

Improper

Purchasing and

Receiving

Increasing

Overtime

Scheduling

High Debt Service

Cost

Unclear

Image of

Property Incorrect Pricing

Menu Variety

(Too Limited or

Too Extensive)

Decreasing

Productivity of

Employees

Poor Design of

Facility

Changing

Atmosphere

Inadequate Service

Pace

Poor Sales

Forecasting

Poor

Organizational

Climate

High Occupancy

Costs

Outdated

Restaurant

Concept

Poor

Merchandising

Changes in

Supplier Market Union Rules

Inadequate Capital

Structure

Inadequate

Promotion

and

Advertising

Lack of Employee

Motivation

High Waste and

Leftovers

Improper

Physical

Layout and

Equipment Low Sales Volume

Changing

Expectations

of Customers

Changing

Customer Dining-

out Budget

Inadequate

Number of

Production

Employees

Poor Employee

Selection and

Training Improper Growth Rate

All Other All Other All Other All Other All Other 42. Consider the following list of activities and technologies. Imagine that the year is

1978. On a scale of 1-100, rate these activities and technologies in terms of how risky

you perceive them to be for the general population in the U.S. Assign a 100 to what you

believe to be the riskiest activity. Low numbers should connote low risk, and high

numbers high risk. Some people think about this question by guessing the average

number of deaths that occur per year in connection with each category.

Motor vehicles Food coloring


47

Mountain climbing Fire fighting General aviation Motorcycles Smoking Food preservatives Power mowers Police work Large construction Swimming Alcoholic beverages Pesticides High school and college football Contraceptives Bicycles Surgery Prescription antibiotics Skiing Commercial aviation Hunting X-rays Handguns Spray cans Vaccinations Nuclear power Home appliances Railroads Electric power

43. Question 10 above asked you to imagine being given the opportunity to play a 50-50

risky alternative whose outcome will be determined by the toss of a coin. If the coin toss

comes up tails, you lose $500. If the coin toss comes up heads, you win $5,000. You can

choose to accept the risky alternative (1), or you can choose to reject the risky alternative

(0).

1. If the amounts in question 10 were lose $450 and win $450 instead of lose

$500 and win $5000, then would you accept the risk or reject the risk?


48

2. If the amounts in question 10 were lose $225 and win $225 instead of lose

$500 and win $5000, would you accept the risk or reject the risk?



44. Repeat question 40, but using the figure below in place of the figure in question 40. In

doing so, do not go back and look at your answers based upon figure 1. Write down your

best guess for the conditional probability attached to each branch. For example, notice

that there are only two possible ways the revenues can decrease, decreasing customers

and decreasing checks per customer. Assuming that both do not occur at once, the sum of

the two conditional probabilities should add up to 100%. Hence, the probability you

would attach to Decreasing Number of Customers is conditional on the restaurant

failing because of Decreasing Revenues. For example, if you assigned a 60%

probability to Decreasing Number of Customers, then you would assign a 40%

probability to Decreasing Average Food/Beverage Check. Similarly, the probabilities

under Decreasing Number of Customers should sum to 100%, as these probabilities are

conditional on the event Decreasing Number of Customers. That is, the probabilities of

the events beginning with Incorrect Pricing and ending with All Other should sum to

100%. Similar statements hold for all five columns in the figure below. Fill in the


49

probabilities, remembering to include the probability of any reason not specifically listed

in the All Other category.

See figure next page.


50

FAULT TREE FOR RESTAURANT

Restaurant

Failure Due to

Decreasing

Profits

Decreasing

Revenues

Increasing

Costs

Decreasing Number

of Customers

Decreasing

Average

Food/Beverage

Check

Increasing Food

Costs

Increasing

Labor Costs

Increasing Overhead

Costs

Incorrect Pricing

Decreasing

Perceived Value by

Customers

Improper

Purchasing and

Receiving

Increasing

Overtime

Scheduling

High Debt Service

Cost

Unclear Image of

Property Incorrect Pricing

Menu Variety

(Too Limited or

Too Extensive)

Decreasing

Productivity of

Employees

Poor Design of

Facility

Changing

Atmosphere

Inadequate Service

Pace

Poor Sales

Forecasting

Poor

Organizational

Climate

High Occupancy

Costs

Outdated

Restaurant Concept

Poor

Merchandising

Changes in

Supplier Market Union Rules

Inadequate Capital

Structure

Inadequate

Promotion and

Advertising

Lack of Employee

Motivation

High Waste and

Leftovers

Improper

Physical

Layout and

Equipment Low Sales Volume

Changing

Expectations of

Customers

Changing

Customer Dining-

out Budget

Inadequate

Number of

Production

Employees

Poor Employee

Selection and

Training Improper Growth Rate

Poor Quality of

Food

Changing Mix of

Food/Beverage

Sales High Theft

High Employee

Turnover

High Administrative

Costs

Changing

Competition

Inconsistent

Quality of Food Poor Supervision

Menu Variety

Too Extensive

Incorrect Work

Method of Personnel

Poor Quality of

Service

Changing

Competition

Incorrect Size of

Food Portions

Poor

Supervision

Improper Business

Hours

Changing Customer

Demographics

Improper Portion

Size

Improper Storage

and Issuing

Inadequate

Wage Structure

Outdated Facility and

Equipment

Lack of Menu

Variety

Changing

Customer

Demographics

Inefficient

Employee

Scheduling High Inflation

Changing Location

Characteristics

Changing

Customer Tastes

Increasing

Benefit Costs Poor Credit Rating

All Other All Other All Other All Other All Other


51

45. Question 21 asks you series of questions about six risky alternatives. All of the charts

pertaining to those alternatives feature positive gross payoffs. Suppose now that you have

to consider facing these same alternatives, except now the amounts represent possible

losses instead. Please answer the following questions.

1. Rank order the six alternatives from top to bottom, by placing a 1 beside the fund

you regard as the best, a 2 beside the fund you regard as second best, etc. Then, in plain

English, explain your thought process in answering this question. Your explanation

should be intelligible to someone like an intelligent fellow student. Enter your answer in

the tab Text Box that is in the Excel spreadsheet.

2. Imagine that you are asked to consider accepting the risk associated with each of

the six alternatives in exchange for compensation. What is the minimum amount (WTA)

you would accept in order to take on the risk? Please provide an answer for each

alternative in turn. That is, provide six different values when answering this question, one

beside each alternative.) Then in plain English, explain your thought process in

answering this question. Your explanation should be intelligible to someone like an

intelligent fellow student. Enter your answer in the tab Text Box that is in the Excel

spreadsheet.

3. Now suppose that you were actually to face each of the risky alternatives, but

have an opportunity to pay a fixed amount (WTP) to avoid the risk entirely. Write down

the maximum amount (WTP) you would be willing to pay to buy your way out of facing


52

each of the six alternatives. Then, in plain English, explain your thought process in

answering this question. Your explanation should be intelligible to someone like an

intelligent fellow student. Enter your answer in the tab Text Box that is in the Excel

spreadsheet.

46. Question 11 asked you to consider the following concurrent choices:

First decision: Choose between

A. a sure gain of $2,400

B. 25% chance to gain $10,000 and 75% chance to gain nothing.

Second decision: Choose between

C. a sure loss of $7,500

D. 75% chance to lose $10,000 and 25% chance to lose nothing

Think about your choice between A and B and suppose that the stakes were different.

Would the size of the stakes change your choice? For example, if the stakes were 1/1000

the size, so that A would feature a gain of $2.40 and B a chance to gain $10, would you

choose differently? Likewise, if the stakes were 100 times larger, with A featuring a gain

of $240,000, would you choose differently? Please identify the critical value for stake

size that would just leave you indifferent between choosing A or B, and enter your

response. If no such critical value exists, enter -1 as your answer. However, if your

answer is 1/10, enter 0.1 as your response. Or if your answer is 100, enter 100 as your

response.


53

Likewise, think about your choice between C and D. Please identify the critical value for

stake size that would just leave you indifferent between choosing C or D, and enter your

response. If no such critical value exists, enter -1 as your answer. However, if your

answer is 1/10, enter 0.1 as your response. Or if your answer is 100, enter 100 as your

response.

In plain English, please explain your thinking. You may enter your response in the

worksheet, or in the tab Text Box, whichever you prefer.

47. In an earlier question you were asked to imagine that you face the following choice. You can accept a guaranteed $1,500 or accept a stylized risk. The outcome of the

stylized risk is determined by the toss of a fair coin. If heads comes up, you win $1,950.

If tails comes up, you win $1,050. You were then asked: Which would you choose?

C = the guaranteed $1,500

D = the 50-50 risk of winning $1,950 or winning $1,050

If you could replace the win $1,050 amount with a number $X that would leave you indifferent between facing C and D, what would the value of X be?

Alternatively, if you could instead replace the win $1,950 amount with an amount $Y, what would the value of Y be?

In plain English, explain the thought process underlying your response. Your explanation


48. In an earlier question you were asked to imagine that you face the following choice. You can accept a guaranteed loss of $750 or accept a stylized risk. The

outcome of the stylized risk is determined by the toss of a fair coin. If heads comes

up, you lose $525. If tails comes up, you lose $975. You were then asked: Which

would you choose?


54

E = the guaranteed loss of $750

F = the 50-50 risk of losing $525 or losing $975

If you could replace the $975 amount with a number $X that would leave you indifferent

between facing E and F, what would the value of X be?

Alternatively, if you could instead replace the lose $525 amount with an amount $Y, what would the value of Y be? If Y represents a loss, enter a minus number, and if Y

represents a gain, enter a number without a minus sign.



49. In an earlier question you were asked to imagine that you have just won $1,500 in one stylized lottery, and have the opportunity to participate in a second stylized lottery.

The outcome of the second lottery is determined by the toss of a fair coin. If heads

comes up, you win $450 in the second lottery. If tails comes up, you lose $450. You

were then asked: Which would you choose?

I = accept the 50-50 risk of winning $450 or losing $450

J = reject the 50-50 risk of winning $450 or losing $450

If you could replace the lose $450 amount with a number $X that would leave you indifferent between facing I and J, what would the value of X be?

Alternatively, if you could instead replace the winning $450 amount with an amount $Y, what would the value of Y be?



50. In an earlier question you were asked to imagine that you have just lost $750 in one stylized lottery, but have the opportunity to participate in a second stylized lottery.



55

comes up, you win $225 in the second lottery. If tails comes up, you lose $225. You

were then asked: Which would you choose?

K = accept the 50-50 risk of winning $225 or losing $225

L = reject the 50-50 risk of winning $225 or losing $225

If you could replace the lose $225 amount with a number $X that would leave you indifferent between facing K and L, what would the value of X be?

Alternatively, if you could instead replace the winning $225 amount with an amount $Y, what would the value of Y be?



51. In an earlier question you were asked to consider a decision task featuring choice from a set of two alternatives M and N with the same expected payoffs. You were

then asked: Which would you choose?

M = a sure loss of $500

N = a 50-50 risk where you will either lose $1000 or lose $0

If you could replace the lose $1000 amount with a number $X that would leave you indifferent between facing M and N, what would the value of X be?

Alternatively, if you could instead replace the lose $0 amount with an amount $Y, what would the value of Y be? If Y represents a loss, enter a minus number, and if Y represents

a gain, enter a number without a minus sign.




56

52. In an earlier question, you were asked to consider a decision task featuring choice from a set of two alternatives O and P with the same expected payoffs. You were then

asked: Which would you choose?

O = a sure loss of $500

P = a 2:1 risk where you will either lose $1000 with probability 1/3 or lose $250 with probability 2/3

If you could replace the lose $1000 amount with an amount $X that would leave you indifferent between facing O and P, what would the value of X be?

Alternatively, if you could instead replace the lose 250 amount with an amount $Y, what would the value of Y be?



53. In an earlier question you were asked to imagine that you have just won $1,500 in one stylized lottery, and have the opportunity to participate in a second stylized lottery.


comes up, you win $1,550 in the second lottery. If tails comes up, you lose $1,550.

You were then asked: Which would you choose?

Q = accept the 50-50 risk of winning $1,550 or losing $1,550

R = reject the 50-50 risk of winning $1,550 or losing $1,550

If you could replace the lose $1,550 amount with an amount $X that would leave you indifferent between facing Q and R, what would the value of X be?

Alternatively, if you could instead replace the win $1,550 amount with an amount $Y, what would the value of Y be?



54. In an earlier question you were asked to imagine that you face a choice between the two alternatives below, designated 30.1 and 301.2. You were then asked: Which

would you prefer?


57


10% chance of zero.


55% chance of zero.

If you could replace the 45% probability of winning $4000 with a probability P that

would leave you indifferent between facing these two alternatives, what would the value

of P be?



55. In an earlier question you were asked to imagine that you face a choice between two situations, designated 31.1 and 31.2. You were then asked: Which would you prefer?





If you could replace the .001 probability of winning $4000 with a probability P that

would leave you indifferent between facing these two alternatives, what would the value

of P be?



56. Are you an MBA student, a PhD, student, or fall into some other category?

57. Briefly describe what you hope to learn from this course.

questionnaire bf lugano 2014

Documents