### Consumer Decision Making

This is a study of consumer decision making. This study evaluates how people understand the accumulation of compound interest. Your task on each trial is to estimate the total cost of each plan for repaying debts on a credit card. Imagine that you borrowed \$10,000 on one credit card, and you charge nothing else on that card until the debt is paid in full. Please type in the boxes provided your estimates of how long (in years) it will take to repay, and how much (in dollars) it will cost. Assume that when the debt is less than \$20, you pay that amount in full, ending the debt. Do not make calculations, we are interested in how people make these estimations intuitively.

The Interest RATE refers to the interest rate per year. Interest is accumulated at the rate of 1/12 of that rate every month. So, for example, if the yearly interest rate is 12%, that means that the credit company will add 1% to the debt each month.

The PAY variable refers to the percentage of the total debt that you pay EACH MONTH. Please keep in mind that the RATE refers to the interest rate per YEAR, and the PAY percentage refers to the amount paid EACH MONTH.

Please type in the spaces provided your estimates of the time in years until the debt will be paid in full, and the total cost including both principal and interest. For example if you think that it will take two and one half years to pay off a debt, type 2.5 in the box labeled TIME, if you think it will cost a total of 12,000 (debt and interest combined) type 12,000 in the box labeled COST.

#### Warmup Trials Consumer Decision Making

Each trial will be presented as in the following example:
W1. RATE: 8 %     PAY: 2 %
TIME COST

This case indicates a debt of \$10,000 at 8% interest and the cardholder pays 2% of the debt per month. How long will it take (TIME in years) to repay this debt in full? How much will this debt COST (in both interest and principle combined) to pay off the debt? Type your estimates in the spaces provided.

W2. RATE: 20 %     PAY: 32 %
TIMECOST

W3. RATE: 8 %     PAY: 32 %
TIMECOST

W4. RATE: 24 %     PAY: 2 %
TIMECOST

W5. RATE: 16 %     PAY: 16 %
TIMECOST

W6. RATE: 12 %     PAY: 4 %
TIMECOST

Please re-read the instructions before you continue. Do not forget that TIME is measured in years, and the total COST includes both the \$10,000 borrowed AND the total interest.

1. RATE: 20 %     PAY: 16 %
TIMECOST

2. RATE: 12 %     PAY: 2 %
TIMECOST

3. RATE: 16 %     PAY: 8 %
TIMECOST

4. RATE: 12 %     PAY: 8 %
TIMECOST

5. RATE: 12 %     PAY: 32 %
TIMECOST

6. RATE: 24 %     PAY: 32 %
TIMECOST

7. RATE: 20 %     PAY: 4 %
TIMECOST

8. RATE: 24 %     PAY: 16 %
TIMECOST

9. RATE: 12 %     PAY: 16 %
TIMECOST

10. RATE: 20 %     PAY: 2 %
TIMECOST

11. RATE: 24 %     PAY: 4 %
TIMECOST

12. RATE: 8 %     PAY: 4 %
TIMECOST

13. RATE: 16 %     PAY: 16 %
TIMECOST

14. RATE: 16 %     PAY: 32 %
TIMECOST

15. RATE: 20 %     PAY: 32 %
TIMECOST

16. RATE: 8 %     PAY: 2 %
TIMECOST

17. RATE: 16 %     PAY: 2 %
TIMECOST

18. RATE: 12 %     PAY: 4 %
TIMECOST

19. RATE: 8 %     PAY: 8 %
TIMECOST

20. RATE: 8 %     PAY: 16 %
TIMECOST

21. RATE: 16 %     PAY: 4 %
TIMECOST

22. RATE: 24 %     PAY: 2 %
TIMECOST

23. RATE: 8 %     PAY: 32 %
TIMECOST

24. RATE: 20 %     PAY: 8 %
TIMECOST

25. RATE: 24 %     PAY: 8 %
TIMECOST

26. What is your age? years.
27. Gender: Are you Male or Female?
Female
Male

28. How many years of Education have you completed? Put 12 for High School Diploma
Put 16 for college diploma (bachelor's degree).
put 20 for doctorate degree (Ph.D., M.D., etc).
Education:
29. Country of birth (e.g., USA):
30. Do you carry a credit card?
Yes
No

31. Comments (CSUF Students: Type CSUF and the last four digits of your ID)