ECON 584: Experimental Economics Module 5 Lab Report Summer 2023

Please review the course syllabus for lab report guidelines. All of your answers for this lab report should be contained within one file. That is, do not submit your graphs in a separate file. Finally, do not include the instructions/questions below in your lab report. Your lab report submission should only contain your graphs and explanations for each question.

Scoring: 5 questions, each worth 20 points

1. In periods 1-5, you were randomly assigned into n = 2 person groups. In each period, you incurred a lobbying cost based on your chosen effort level which affected the probability that you would win a prize of $16,000. Each additional unit of effort increased your lobbying cost by $500 and you could choose any effort level between 0 and 16 in whole numbers.

Each individual's probability of winning the prize is proportional to their chosen effort level

relative to the group's total amount of effort. That is, the probability of individualwinning the

prize =whererepresents the effort level chosen by playerand the denominator is=1,,

the sum of the effort levels chosen by all individuals in the group including player.

If both of the two participants in the group chose an effort of 1, then the $16,000 prize would be award randomly with both members having an equal chance of winning the prize. Briefly explain why this outcome just described is not a Nash equilibrium of this lobbying game if we assume that everyone is self-interested.

Hint: In this experiment, we assume that each self-interested player seeks to maximize their expected payoff. The expected payoff for a player equalsprobability win prize prize value effort cost. Under this assumption, why is not optimal for a player to choose an effort of 1 if they believe that their opponent is currently choosing an effort of 1?

1. Assume that both participants in the group incur $3,500 in lobbying costs. That is, they each choose an effort level of 7:

What is the actual payoff off the winning individual for that period? What is the actual payoff of the losing individual for that period? What is the expected payoff for each of these 2 participants before the winner is

randomly determined for that period? If one of the participants deviated from an effort level of 7 to and an effort level of 8,

would that individual's expected payoff increase? Use your answer to explain why or why not an effort level of 7 is a Nash equilibrium of the lobbying game.

Be sure to show how arrived at your answers for full credit.

1. In periods 6-10, all factors were held constant except that the individual lobbying cost increased to $1,000 per unit of effort expended. The idea here was to study how changes in the lobbying effort cost affected lobbying expenditures in the experiment.

The data for periods 1-10 is on Brightspace. compare average individual lobbying expenditures across these two treatments.

To do this, you will create a LINE chart displaying the average individual lobbying expenditure for each period of play. Furthermore, format your graph as follows:

The horizontal axis values should be 1-5 and the horizontal axis should be labeled "Period"

You should create separate lines for periods 1-5 and periods 6-10 but these two lines should be plotted on the same graph (i.e. the lines should overlay one another)

Include a legend in your graph to indicate whether each line corresponds to periods 1-5 or periods 6-10

It is not necessary to label the vertical axis or to include a title for your graph

1. Periods 11-20 were similar to periods 1-10. The only difference is that you were now randomly assigned to n = 4 person groups in each period. In periods 11-15, each unit of effort increased your lobbying cost by $500 (i.e. the same lobbying cost in periods 1-5). In periods 16-20, each unit of effort increased your lobbying cost by $1,000 (i.e. the same lobbying cost in periods 6- 10).

Follow the instructions from question #3, to create a New line chart comparing the average individual lobbying expenditures across periods 11-15 and periods 16-20.

1. After creating your line charts in questions #3 and #4, use them to briefly (i.e. in a few sentences) answer the following questions:
   • Each line chart analyzed how an increase in the per-unit lobbying effort cost from $500 to $1,000 affected individual lobbying expenditures in the game. Based on your two line charts, how did increasing the lobbying effort cost affect observed individual lobbying expenditures?
   • Comparing your line chart in question #3 vs. question #4 will illustrate how an increase in the group size from n = 2 to n = 4 affected individual lobbying expenditures in the game. How did the larger group size affect individual lobbying expenditures (while holding the lobbying effort cost constant)?

Round	ID	Effort	Individual Lobbying Expenditure
1	1	8	$4,000
1	2	1	$500
1	3	15	$7,500
1	4	16	$8,000
1	5	16	$8,000
1	6	6	$3,000
1	7	16	$8,000
1	8	8	$4,000
1	9	2	$1,000
1	10	16	$8,000
1	11	2	$1,000
1	12	16	$8,000
1	13	14	$7,000
1	14	4	$2,000
1	15	16	$8,000
1	16	2	$1,000
1	17	16	$8,000
1	18	16	$8,000
1	19	0	$0
1	20	8	$4,000
1	21	16	$8,000
1	22	9	$4,500
1	23	10	$5,000
1	24	6	$3,000
2	1	9	$4,500
2	2	4	$2,000
2	3	11	$5,500
2	4	16	$8,000
2	5	16	$8,000
2	6	4	$2,000
2	7	10	$5,000
2	8	12	$6,000
2	9	2	$1,000
2	10	16	$8,000
2	11	16	$8,000
2	12	16	$8,000
2	13	16	$8,000
2	14	5	$2,500
2	15	5	$2,500
2	16	5	$2,500
2	17	16	$8,000
2	18	16	$8,000
2	19	2	$1,000
2	20	7	$3,500
2	21	16	$8,000
2	22	10	$5,000
2	23	12	$6,000
2	24	5	$2,500
3	1	10	$5,000
3	2	4	$2,000
3	3	11	$5,500
3	4	16	$8,000
3	5	16	$8,000
3	6	6	$3,000
3	7	5	$2,500
3	8	8	$4,000
3	9	4	$2,000
3	10	16	$8,000
3	11	16	$8,000
3	12	16	$8,000
3	13	16	$8,000
3	14	16	$8,000
3	15	8	$4,000
3	16	3	$1,500
3	17	16	$8,000
3	18	2	$1,000
3	19	16	$8,000
3	20	6	$3,000
3	21	16	$8,000
3	22	10	$5,000
3	23	11	$5,500
3	24	6	$3,000
4	1	10	$5,000
4	2	4	$2,000
4	3	11	$5,500
4	4	14	$7,000
4	5	16	$8,000
4	6	14	$7,000
4	7	4	$2,000
4	8	8	$4,000
4	9	6	$3,000
4	10	16	$8,000
4	11	15	$7,500
4	12	16	$8,000
4	13	1	$500
4	14	16	$8,000
4	15	7	$3,500
4	16	8	$4,000
4	17	16	$8,000
4	18	15	$7,500
4	19	4	$2,000
4	20	7	$3,500
4	21	16	$8,000
4	22	10	$5,000
4	23	12	$6,000
4	24	8	$4,000
5	1	10	$5,000
5	2	8	$4,000
5	3	11	$5,500
5	4	14	$7,000
5	5	16	$8,000
5	6	14	$7,000
5	7	1	$500
5	8	8	$4,000
5	9	6	$3,000
5	10	16	$8,000
5	11	14	$7,000
5	12	8	$4,000
5	13	16	$8,000
5	14	16	$8,000
5	15	8	$4,000
5	16	16	$8,000
5	17	16	$8,000
5	18	12	$6,000
5	19	0	$0
5	20	8	$4,000
5	21	16	$8,000
5	22	10	$5,000
5	23	5	$2,500
5	24	4	$2,000
6	1	6	$6,000
6	2	4	$4,000
6	3	6	$6,000
6	4	8	$8,000
6	5	16	$16,000
6	6	12	$12,000
6	7	2	$2,000
6	8	6	$6,000
6	9	2	$2,000
6	10	8	$8,000
6	11	5	$5,000
6	12	8	$8,000
6	13	12	$12,000
6	14	15	$15,000
6	15	7	$7,000
6	16	1	$1,000
6	17	16	$16,000
6	18	8	$8,000
6	19	0	$0
6	20	8	$8,000
6	21	1	$1,000
6	22	7	$7,000
6	23	4	$4,000
6	24	8	$8,000
7	1	8	$8,000
7	2	1	$1,000
7	3	8	$8,000
7	4	8	$8,000
7	5	8	$8,000
7	6	12	$12,000
7	7	2	$2,000
7	8	4	$4,000
7	9	2	$2,000
7	10	8	$8,000
7	11	10	$10,000
7	12	8	$8,000
7	13	12	$12,000
7	14	15	$15,000
7	15	8	$8,000
7	16	12	$12,000
7	17	8	$8,000
7	18	4	$4,000
7	19	1	$1,000
7	20	7	$7,000
7	21	1	$1,000
7	22	7	$7,000
7	23	6	$6,000
7	24	4	$4,000
8	1	10	$10,000
8	2	8	$8,000
8	3	9	$9,000
8	4	8	$8,000
8	5	8	$8,000
8	6	14	$14,000
8	7	2	$2,000
8	8	2	$2,000
8	9	2	$2,000
8	10	8	$8,000
8	11	10	$10,000
8	12	6	$6,000
8	13	12	$12,000
8	14	14	$14,000
8	15	9	$9,000
8	16	15	$15,000
8	17	8	$8,000
8	18	8	$8,000
8	19	1	$1,000
8	20	6	$6,000
8	21	1	$1,000
8	22	6	$6,000
8	23	7	$7,000
8	24	6	$6,000
9	1	10	$10,000
9	2	8	$8,000
9	3	9	$9,000
9	4	8	$8,000
9	5	8	$8,000
9	6	6	$6,000
9	7	2	$2,000
9	8	8	$8,000
9	9	3	$3,000
9	10	8	$8,000
9	11	10	$10,000
9	12	3	$3,000
9	13	10	$10,000
9	14	14	$14,000
9	15	8	$8,000
9	16	0	$0
9	17	8	$8,000
9	18	6	$6,000
9	19	3	$3,000
9	20	7	$7,000
9	21	1	$1,000
9	22	6	$6,000
9	23	7	$7,000
9	24	3	$3,000
10	1	10	$10,000
10	2	8	$8,000
10	3	9	$9,000
10	4	8	$8,000
10	5	8	$8,000
10	6	6	$6,000
10	7	2	$2,000
10	8	4	$4,000
10	9	4	$4,000
10	10	8	$8,000
10	11	10	$10,000
10	12	8	$8,000
10	13	12	$12,000
10	14	15	$15,000
10	15	14	$14,000
10	16	1	$1,000
10	17	8	$8,000
10	18	1	$1,000
10	19	0	$0
10	20	8	$8,000
10	21	1	$1,000
10	22	6	$6,000
10	23	7	$7,000
10	24	4	$4,000
11	1	16	$8,000
11	2	16	$8,000
11	3	8	$4,000
11	4	1	$500
11	5	16	$8,000
11	6	16	$8,000
11	7	1	$500
11	8	8	$4,000
11	9	8	$4,000
11	10	6	$3,000
11	11	5	$2,500
11	12	14	$7,000
11	13	16	$8,000
11	14	4	$2,000
11	15	8	$4,000
11	16	15	$7,500
11	17	16	$8,000
11	18	8	$4,000
11	19	1	$500
11	20	0	$0
11	21	16	$8,000
11	22	9	$4,500
11	23	15	$7,500
11	24	4	$2,000
12	1	2	$1,000
12	2	16	$8,000
12	3	8	$4,000
12	4	16	$8,000
12	5	16	$8,000
12	6	4	$2,000
12	7	0	$0
12	8	8	$4,000
12	9	4	$2,000
12	10	6	$3,000
12	11	4	$2,000
12	12	10	$5,000
12	13	1	$500
12	14	8	$4,000
12	15	8	$4,000
12	16	16	$8,000
12	17	0	$0
12	18	16	$8,000
12	19	0	$0
12	20	6	$3,000
12	21	1	$500
12	22	8	$4,000
12	23	15	$7,500
12	24	8	$4,000
13	1	2	$1,000
13	2	16	$8,000
13	3	8	$4,000
13	4	16	$8,000
13	5	16	$8,000
13	6	4	$2,000
13	7	0	$0
13	8	8	$4,000
13	9	8	$4,000
13	10	6	$3,000
13	11	3	$1,500
13	12	10	$5,000
13	13	1	$500
13	14	8	$4,000
13	15	8	$4,000
13	16	8	$4,000
13	17	5	$2,500
13	18	0	$0
13	19	0	$0
13	20	0	$0
13	21	0	$0
13	22	7	$3,500
13	23	9	$4,500
13	24	8	$4,000
14	1	1	$500
14	2	16	$8,000
14	3	8	$4,000
14	4	1	$500
14	5	16	$8,000
14	6	0	$0
14	7	0	$0
14	8	8	$4,000
14	9	8	$4,000
14	10	6	$3,000
14	11	5	$2,500
14	12	10	$5,000
14	13	1	$500
14	14	8	$4,000
14	15	8	$4,000
14	16	8	$4,000
14	17	10	$5,000
14	18	0	$0
14	19	0	$0
14	20	10	$5,000
14	21	0	$0
14	22	6	$3,000
14	23	9	$4,500
14	24	8	$4,000
15	1	4	$2,000
15	2	16	$8,000
15	3	8	$4,000
15	4	1	$500
15	5	0	$0
15	6	4	$2,000
15	7	10	$5,000
15	8	8	$4,000
15	9	4	$2,000
15	10	6	$3,000
15	11	4	$2,000
15	12	10	$5,000
15	13	1	$500
15	14	4	$2,000
15	15	8	$4,000
15	16	8	$4,000
15	17	12	$6,000
15	18	0	$0
15	19	0	$0
15	20	10	$5,000
15	21	0	$0
15	22	6	$3,000
15	23	9	$4,500
15	24	8	$4,000
16	1	2	$2,000
16	2	10	$10,000
16	3	8	$8,000
16	4	5	$5,000
16	5	8	$8,000
16	6	3	$3,000
16	7	5	$5,000
16	8	4	$4,000
16	9	4	$4,000
16	10	5	$5,000
16	11	4	$4,000
16	12	6	$6,000
16	13	1	$1,000
16	14	4	$4,000
16	15	4	$4,000
16	16	8	$8,000
16	17	4	$4,000
16	18	0	$0
16	19	0	$0
16	20	3	$3,000
16	21	0	$0
16	22	4	$4,000
16	23	5	$5,000
16	24	4	$4,000
17	1	2	$2,000
17	2	8	$8,000
17	3	8	$8,000
17	4	1	$1,000
17	5	8	$8,000
17	6	4	$4,000
17	7	0	$0
17	8	4	$4,000
17	9	4	$4,000
17	10	8	$8,000
17	11	6	$6,000
17	12	6	$6,000
17	13	1	$1,000
17	14	4	$4,000
17	15	4	$4,000
17	16	0	$0
17	17	6	$6,000
17	18	0	$0
17	19	0	$0
17	20	10	$10,000
17	21	0	$0
17	22	4	$4,000
17	23	5	$5,000
17	24	4	$4,000
18	1	1	$1,000
18	2	8	$8,000
18	3	8	$8,000
18	4	16	$16,000
18	5	8	$8,000
18	6	8	$8,000
18	7	0	$0
18	8	4	$4,000
18	9	4	$4,000
18	10	7	$7,000
18	11	3	$3,000
18	12	6	$6,000
18	13	1	$1,000
18	14	4	$4,000
18	15	4	$4,000
18	16	0	$0
18	17	0	$0
18	18	0	$0
18	19	0	$0
18	20	6	$6,000
18	21	0	$0
18	22	4	$4,000
18	23	5	$5,000
18	24	4	$4,000
19	1	1	$1,000
19	2	6	$6,000
19	3	8	$8,000
19	4	8	$8,000
19	5	8	$8,000
19	6	8	$8,000
19	7	0	$0
19	8	4	$4,000
19	9	4	$4,000
19	10	9	$9,000
19	11	2	$2,000
19	12	6	$6,000
19	13	1	$1,000
19	14	4	$4,000
19	15	4	$4,000
19	16	8	$8,000
19	17	1	$1,000
19	18	0	$0
19	19	0	$0
19	20	8	$8,000
19	21	0	$0
19	22	4	$4,000
19	23	5	$5,000
19	24	4	$4,000
20	1	1	$1,000
20	2	2	$2,000
20	3	8	$8,000
20	4	16	$16,000
20	5	1	$1,000
20	6	4	$4,000
20	7	0	$0
20	8	4	$4,000
20	9	4	$4,000
20	10	5	$5,000
20	11	4	$4,000
20	12	6	$6,000
20	13	1	$1,000
20	14	4	$4,000
20	15	4	$4,000
20	16	15	$15,000
20	17	14	$14,000
20	18	0	$0
20	19	0	$0
20	20	9	$9,000
20	21	0	$0
20	22	4	$4,000
20	23	5	$5,000
20	24	4	$4,000

Answer rating: 100% (QA)

In periods 15 the lobbying cost increased by 500 for each additional unit of effort expended If both participants in a group chose an effort level of 1 the 16000 prize would be awarded randomly with b... View the full answer