In a study, researchers asked participants two questions: 1) Assume you had been exposed to a disease
Question:
In a study, researchers asked participants two questions:
1) Assume you had been exposed to a disease which if contracted leads to a quick and painless death within a week. The probability you have the disease is 0.001. What is the maximum you would be willing to pay for a cure?
2) Suppose volunteers were needed for research on the above disease. All that would be required is that you expose yourself to a 0.001 chance of contracting the disease. What is the minimum payment you would require to volunteer for this program?
Based on what you have learned from the behavioral economics course so far, you would predict:
a) On average, the payment amount answered in 1) would be the same as the amount in 2).
b) On average, the payment amount answered in 1) would be higher than the amount given in 2).
c) On average, the payment amount answered in 1) would be lower than the amount given in 2).