{% load otree %}
To ensure that you understand the earlier instructions, please answer a few questions. You will not be able to proceed to the next part unless you answer these questions correctly.
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You are currently under a performance contract with the following terms:
You will receive a base wage of $10 with the possibility of receiving a $10 bonus. As a result, the maximum amount of earnings for this stage is $20 ($10 base wage + $10 bonus). To receive this bonus, you must achieve a high performance outcome (rather than a low performance outcome).
Recall:
At the end of the study, your performance outcome will be determined by drawing one chip at random from a bag containing 20 chips. You will achieve a high performance outcome if a red chip is drawn. Before your effort choice, you have a 25% chance of drawing a red chip, achieving a high performance outcome and receiving the $10 bonus.
In this stage you will be asked to choose your effort level under the performance contract. The higher the effort level you choose, the more additional red chips will be added to the bag to replace blue chips, the higher the likelihood you will receive the bonus.
However, effort is costly. The more additional red chips you want in the bag (i.e., the higher your effort level), the more you must pay in effort costs, which reduces your total earnings. The table below summarizes the effect from each effort level:
| Effort Level | Additional Red Chips Added | Total Number of Red Chips | Total Number of Blue Chips | Total Cost of Effort | Probability of Drawing a Red Chip and Achieving a High Performance Outcome and Receiving the $10 Bonus | Probability of Drawing a Blue Chip and Achieving a Low Performance Outcome and NOT Receiving the $10 Bonus |
|---|---|---|---|---|---|---|
| 1 | 1 | 6 | 14 | $0.50 | 30% | 70% |
| 2 | 2 | 7 | 13 | $1.00 | 35% | 65% |
| 3 | 3 | 8 | 12 | $1.50 | 40% | 60% |
| 4 | 4 | 9 | 11 | $2.00 | 45% | 55% |
| 5 | 5 | 10 | 10 | $2.50 | 50% | 50% |
| 6 | 6 | 11 | 9 | $3.00 | 55% | 45% |
| 7 | 7 | 12 | 8 | $3.50 | 60% | 40% |
| 8 | 8 | 13 | 7 | $4.00 | 65% | 35% |
| 9 | 9 | 14 | 6 | $4.50 | 70% | 30% |
| 10 | 10 | 15 | 5 | $5.00 | 75% | 25% |
| 11 | 11 | 16 | 4 | $5.50 | 80% | 20% |
| 12 | 12 | 17 | 3 | $6.00 | 85% | 15% |
| 13 | 13 | 18 | 2 | $6.50 | 90% | 10% |
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{{ formfields }}