P and R in gray cells mean owners' possible choices. A and B in blue cells mean managers' possible choices. Owners' choices in stage 1 decide one among four cases, P and P, P and R, R and P, and R and R. Then, owners' earnings will be one of the black numbers in boldface type in the table case by case.
Suppose you are an owner. Then, earnings in the four possible cases are as follows;
- If you select P
and the other owner selects P, then your earnings will be 1250 or 925 or 1406 or 1111.
- If you select P and the other owner selects R, then your earnings will be 1125 or 702 or 1225 or 630.
- If you select R and the other owner selects P, then your earnings will be 1350 or 1050 or 1222 or 846.
- If you select R and the other owner selects R, then your earnings will be 1200 or 750 or 1125 or 800.
- If you select P and the other owner selects R, then your earnings will be 1125 or 702 or 1225 or 630.
- If you select R and the other owner selects P, then your earnings will be 1350 or 1050 or 1222 or 846.
- If you select R and the other owner selects R, then your earnings will be 1200 or 750 or 1125 or 800.
Stage 2 - Managers' decisions
In stage 2, managers choose A or B, which decides earnings and fine for owners and managers.
A different table for earnings is given to managers in stage 2, depending on owners' selections in stage 1. Blue numbers in the tables below indicate managers' earnings, Fines are already reflected to each table. Thus, all you have to do is to care about your earnings in the table given to you in each case.
Suppose you are a manager. First, let's look at the case that both owners choose P in stage 1.
- If you and the other manager select A, then you and the other manager get 125 respectively.
With a 15% chance, you have to pay a fine, 23, and the other manager has to pay a fine, 23.
With the other 85% chance, there are no fines.
- If you select A and the other manager selects B, then you get 93 and the other manager gets 141.
- If you select B and the other manager selects A, then you get 141and the other manager gets 93.
- If you select B and the other manager selects B, then you get 111and the other manager gets 111.
The second case is that your firm's owner choose P and the other firm's owner choose R in stage 1.
- If you and the other manager select A, then you get 138 and the other manager gets 124.
With a 15% chance, you have to pay a fine, 26, and the other manager has to pay a fine, 23.
With the other 85% chance, there are no fines.
- If you select A and the other manager selects B, then you get 95 and the other manager gets 145.
- If you select B and the other manager selects A, then you get 148 and the other manager gets 94.
- If you select B and the other manager selects B, then you get 88 and the other manager gets 107.
The third case is that your firm's owner choose R and the other firm's owner choose P in stage 1.
- If you and the other manager select A, then you get 124 and the other manager gets 138.
With a 15% chance, you have to pay a fine, 23, and the other manager has to pay a fine, 26.
With the other 85% chance, there are no fines.
- If you select A and the other manager selects B, then you get 94 and the other manager gets 148.
- If you select B and the other manager selects A, then you get 145 and the other manager gets 95.
- If you select B and the other manager selects B, then you get 107 and the other manager gets 88.
The fourth case is that your firm's owner choose R and the other firm's owner choose R in stage 1.
- If you and the other manager select A, then you and the other manager get 128 respectively.
With a 15% chance, you have to pay a fine, 26, and the other manager has to pay a fine, 26.
With the other 85% chance, there are no fines.
- If you select A and the other manager selects B, then you get 83 and the other manager gets 150.
- If you select B and the other manager selects A, then you get 150 and the other manager gets 83.
- If you select B and the other manager selects B, then you get 108 and the other manager gets 108.
In addition, fines are imposed to owners with a 15% chance if both managers choose A. The table below indicates each of the cases that both managers choose A and fines are imposed to owners, depending on owners' selections. If you are an owner, the table will be given to you in your decision.
In brief, earnings and fine rely on 1) whether owners select P or R, 2) whether managers select A or B. Please click the next button to go to the stage 1 in round 1.
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