Simulating Personal Wealth in the Laboratory

During laboratory gambling tasks participants are not typically allowed to wager their personal wealth. Instead, wealth is simulated by telling participants they have been endowed with game tokens that will be later exchanged for money. Past research indicates that participants undervalue game tokens following this procedure, which leads to elevated risk taking compared to procedures that add saliency or realism to the monetary payoff. A between-subjects experiment tested whether showing a picture of money during the endowment instructions and repeating token-money exchange information during the session influenced participants' preference for risky and riskless options. The results showed no effect of the money picture. However, repeated token-money exchange information significantly decreased risk taking. Together with past studies, this finding suggests that endowment procedures might establish greater value in game tokens, and therefore better simulate personal wealth, when the eventual exchange between game tokens and money is made more salient to participants.