Experiment
Duration
The experiment is divided into periods. In each period you face the same decision-making situation. The experiment consists of 10 periods.
Roles
Every participant is assigned a role, A or B or C. In the following we refer to participants as A-participant, B-participant and C-participant. The roles are randomly assigned before the first period and will not change during the experiment. All participants are treated equally during the assignment. Before the first period, every participant is informed about her role.
Groups
Prior to the first period, all participants are divided randomly into independent groups of six participants. Each group consists of four A-participants (in the following A1 to A4), one B-participant (in the following B) and one C-participant (in the following C).
Groups remain the same throughout the experiment, meaning that you solely interact with members of your group. Decisions made by members of other groups will not affect your group.
Sequence
1) Receipt of Endowment
At the beginning of every period, each of the four A-participants receives an endowment of 20 ECU. During the period, participants make decisions regarding the use of the endowment. The endowment is not transferable between periods, meaning that an A-participant cannot use her period-one-endowment in period two.
At the beginning of every period, the B-participant and C-participant does not receive any endowment or income.
2) Decisions of A-participants
Each of the four A-participants in one group decides how much of her endowment to contribute to a joint pool. Specifically, A-participants choose an integer amount in increments of 5, between 0 and 20 (indicating 0 and 20 is possible), that is contributed to the pool. The following tables show illustrative examples. The decisions made by the participants in the actual experiment may differ from the exemplary decisions. Please take a look at the following table.
Example 1
| Contribution A1 | 20 ECU | |
| + | Contribution A2 | 20 ECU |
| + | Contribution A3 | 20 ECU |
| + | Contribution A4 | 20 ECU |
| Pool | 80 ECU | |
Example 2
| Contribution A1 | 0 ECU | |
| + | Contribution A2 | 20 ECU |
| + | Contribution A3 | 5 ECU |
| + | Contribution A4 | 15 ECU |
| Pool | 40 ECU | |
3) Multiplication of the Pool
The pool is multiplied by the factor 3 . Please take a look at the following table.
Example 1
| Pool | 80 ECU |
| Multiplied pool | 240 ECU |
Example 2
| Pool | 40 ECU |
| Multiplied pool | 120 ECU |
4a) Decision of B-participant
The B-participant in every group decides which part of the multiplied pool she would like to release (released amount). She can release every integer amount in increments of 5, between 0 and the multiplied pool (releasing 0 and the entire multiplied pool is possible).
The released amount will be equally distributed among the four A-participants of a group. If the released amount is 160 ECU (see Example 1b), every A-participant receives 160/4=40 ECU. The remaining unreleased amount of 80 ECU is equally distributed among the B-participant and C-participant. Please take a look at the following table.
Example 1
| Multiplied pool | 240 ECU |
a)
| Released amount | 240 ECU |
| Every A-participant receives | 60 ECU |
| The B-participant receives | 0 ECU |
| The C-participant receives | 0 ECU |
b)
| Released amount | 160 ECU |
| Every A-participant receives | 40 ECU |
| The B-participant receives | 40 ECU |
| The C-participant receives | 40 ECU |
Example 2
| Multiplied pool | 120 ECU |
a)
| Released amount | 120 ECU |
| Every A-participant receives | 30 ECU |
| The B-participant receives | 0 ECU |
| The C-participant receives | 0 ECU |
b)
| Released amount | 40 ECU |
| Every A-participant receives | 10 ECU |
| The B-participant receives | 40 ECU |
| The C-participant receives | 40 ECU |
4b) A-participants Make Estimates
While the B-participant is making her decision, every A-participant estimates the decisions made by other participants. The estimates are private information and, hence, cannot influence the behavior of other participants.
1. Every A-participant estimates the total contribution of the other A-participants. Based on this estimate, the estimated multiplied pool is calculated.
Estimated multiplied pool
| Estimated total contribution of other three A-participants’ | |
| + Own contribution | |
| x 3 | |
| Estimated multiplied pool | |
2. Every A-participant estimates the released amount (estimation of the part of the estimated multiplied pool that is released).
4c) C-participants Make Estimates
While the A-participant is making her decision, The C-participant estimates the decisions made by other participants. The estimates are private information and, hence, cannot influence the behavior of other participants.
1. The C-participant estimates the total contribution of all A-participants. Based on this estimate, the estimated multiplied pool is calculated.
Estimated multiplied pool
| Estimated total contribution of all A-participants’ | |
| x 3 | |
| Estimated multiplied pool | |
2. The C-participant estimates the released amount (estimation of the part of the estimated multiplied pool that is released).
5) Informing A-, B- and C-Participants
At the end of each period, all participants receive detailed information.
Every A-participant learns about
- her endowment
- her contribution
- the amount she has not paid into the pool
- the pool
- the multiplied pool
- the released amount
Note that the released amount may be ±10, ±5, or exactly equal to the actual released amount. For example, if the actual released amount is 50, the possible released amounts will be 40, 45, 50, 55, or 60. If the actual released amount is less than 10, such as 0 or 5, the possible released amounts will be 0, 5, 10, 15, or 20.
- the own portion of the released amount
- the unreleased amount
- The B-participant’s portion of the unreleased amount
- The C-participant’s portion of the unreleased amount
- the own period payoff
Every B-participant learns about
- the pool
- the multiplied pool
- the released amount
- every A-participant’s portion of the released amount
- the unreleased amount
- the own portion of the unreleased amount
- The C-participant’s portion of the unreleased amount
- the own period payoff
Every C-participant learns about
- the pool
- the multiplied pool
- the released amount
- every A-participant’s portion of the released amount
- the unreleased amount
- the own portion of the unreleased amount
- The B-participant’s portion of the unreleased amount
- the own period payoff
None of A-participants, B-participant and C-participant will be informed about the A-participants’ individual contributions to the pool.
Period Payoff
The A-, B- and C-participants’ period payoffs are calculated as follows:
A- participant’s payoff
| Endowment | |
| - Contribution | |
| + Portion of the released amount | |
| Period payoff | |
Please note that the A-participant’s payoff may not reflect the full accuracy.
B- participant’s payoff
| Portion of the unreleased amount | |
| Period payoff | |
C- participant’s payoff
| Portion of the unreleased amount | |
| Period payoff | |
Please take a look at the following table.
Example 1
| Multiplied pool | 240 ECU |
a)
| Released amount | 240 ECU |
| Every A-participant receives | 60 ECU |
| The B-participant receives | 0 ECU |
| The C-participant receives | 0 ECU |
All A-participants have a payoff of 60 ECU. The B-participant and C-participant have a payoff of 0 ECU.
b)
| Released amount | 160 ECU |
| Every A-participant receives | 40 ECU |
| The B-participant receives | 40 ECU |
| The C-participant receives | 40 ECU |
All Participants (A, B and C) have a payoff of 40 ECU.
Example 2
| Multiplied pool | 120 ECU |
a)
| Released amount | 120 ECU |
| Every A-participant receives | 30 ECU |
| The B-participant receives | 0 ECU |
| The C-participant receives | 0 ECU |
A-participants’ payoffs vary between 30 ECU and 50 ECU. The B-participant and C-participant have a payoff of 0 ECU.
b)
| Released amount | 40 ECU |
| Every A-participant receives | 10 ECU |
| The B-participant receives | 40 ECU |
| The C-participant receives | 40 ECU |
A-participants’ payoffs vary between 10 ECU and 30 ECU. The B-participant and C-participant have a payoff of 40 ECU.