pool (in Canada instead of China). For the Chinese subjects, a scaling up of payoffs by
a factor of 10 produced more risk aversion (or more precisely, less risk seeking) for the
BDM selling-price procedure. In contrast, the Canadian subjects showed little or no
effect of scaling up hypothetical payoffs, which suggests the importance of using real
cash payoffs.
The issue of whether or not it is appropriate to study high-stakes situations with
high hypothetical payoffs was, at this point, unclear. In our 2002 paper, we reported
within-subjects comparisons using scaled versions of the choice menu in Table 4.3 ...
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