Payoffs and Compensation
As Manager, you will receive a fixed salary of $5.00 for completing your task. This means that you will receive $11.00 in total guaranteed compensation (including your participation fee of $6.00) for completing the study.
Your primary task is to complete the performance evaluations {{ if player.condition == 3 or player.condition == 4}}and bonus allocations {{ endif }} for Employees on your assigned team.
Employees’ total compensation for the study will include their participation fee of {{ if player.condition == 1 or player.condition == 2 }}$5.00{{else}}$3.00{{ endif }} plus additional compensation based on the total points earned (50 points = $1.00) from the task they complete.
This compensation will include the following:
| 1. | Points (output) generated by any points an Employee uses to increase their own total output. |
| 2. | Points (output) generated by any points any teammate(s) of the Employee use to increase the Employee’s total output. As previously mentioned, the sum of (1) and (2) is equal to the Employee’s total output for the period. |
| 3. | Any points you allocate to the Employee from your team’s discretionary bonus pool of 400 points. |
Example
For illustrative purposes, consider the example presented to you earlier:
Suppose on a given team that Employee 1 chooses to use 35 A points and 35 B points to increase their own total output, and chooses to use their remaining points (15 of each type) to increase the output of Employees 2, 3, and 4 (i.e., 5 points of each type used to increase the output of each of these other Employees).
Suppose also that Employees 2, 3, and/or 4 use a total of 12 points to increase the total output of Employee 1, and that these points generate output of 10 points. Employee 1’s total output would include these 10 points.
Results would be determined as follows:
Effect on Employee 1’s total output of Employee 1’s use of points:
| Resource type: | Points used by Employee 1 to increase their own total output: | Output generated: |
| A | 35 | (35 × 2 = ) 70 points |
| B | 35 | (35 × 1 = ) 35 points |
| Sub-total | (70 + 35 = ) 105 points | |
| Output generated from the 12 points used by teammates to increase Employee 1's total output | 10 points | |
| Employee 1's total output | (105 + 10 =) 115 points | |
Effect of points used by Employee 1 to increase the total output of Employees 2, 3, and 4:
| Resource (point) type: | Points used to increase total output: | Output generated: |
| A | 5 | Between 7.5 and 12.5 points |
| B | 5 | Between 2.5 and 7.5 points |
| Total | Between 10 and 20 points |
Recall that the output generated per point used to increase the output of another Employee is randomly determined separately for any Employee who chooses to use points in this way and ranges between 1.5 and 2.5 for A points and 0.5 and 1.5 for B points.
Suppose that the random draw results in multipliers of 1.5 for A points and 0.8 for B points. In that case, the points used by Employee 1 would generate the following output for teammates:
| Points used and output generated for: | ||||||||
| Employee 2 | Employee 3 | Employee 4 | ||||||
| Resource type: | Points: | Output generated: | Points: | Output generated: | Points: | Output generated: | ||
| A | 5 | 7.5 points | 5 | 7.5 points | 5 | 7.5 points | ||
| B | 5 | 4.0 points | 5 | 4.0 points | 5 | 4.0 points | ||
| Total | 11.5 points | 11.5 points | 11.5 points | |||||
The team’s Manager would see the following information for Employee 1 (note that the Manager would see this information for the other Employees on the team as well):
| Employee | Employee total output | {{ if player.condition == 2 or player.condition == 4 }}Number of points used to increase the total output of another Employee | Number of points used by teammates to increase the total output of this Employee | {{ endif }}
| 1 | 115 | {{ if player.condition == 2 or player.condition == 4 }}30 | 12 | {{ endif }}
Recall that Managers know each Employee can choose to use points to increase the total output of any other Employee on the team, but will not learn whether any Employee used points in this manner or whether any Employee’s output was increased by points used in this manner.
{{ endif }}In addition, suppose the team’s Manager rates Employee 1's performance at 75 (1-100){{ if player.condition == 3 or player.condition == 4 }} and chooses to allocate 100 points from the team’s discretionary bonus pool to Employee 1{{ endif }}.
Employee 1's compensation would include:
| {{ if player.condition == 1 or player.condition == 2 }} {{ endif }}Points earned from total output: {{ if player.condition == 1 or player.condition == 2 }}{{ endif }} | 115 | |
| Points allocated by Manager from the bonus pool: | 100 | |
| Total points | {{ if player.condition == 1 or player.condition == 2 }}115{{ else }}215{{ endif }} | |
| Compensation earned: ({{ if player.condition == 1 or player.condition == 2 }}115 {{ else }}215 {{ endif }}points / 50 points per $1.00 = ) | {{ if player.condition == 1 or player.condition == 2 }}$2.30{{ else }}$4.30{{ endif }} plus participation fee |
In sum, your primary task is to complete performance evaluations on a scale of 1-100 {{ if player.condition == 3 or player.condition == 4 }} and allocate the discretionary bonus pool of 400 points{{ endif }} for your assigned team.
You will receive the following information for each Employee.
| Employee | Employee total output | {{ if player.condition == 2 or player.condition == 4 }}Number of points used to increase the total output of another Employee (or other Employees) | Number of points used by teammates to increase the total output of this Employee | {{ endif }}
| 1 | Output generated by the Employee’s use of their own points plus any output generated by points used to benefit the Employee by teammates. | {{ if player.condition == 2 or player.condition == 4 }}# | # | {{ endif }}
| 2 | {{ if player.condition == 2 or player.condition == 4 }}# | # | {{ endif }}|
| 3 | {{ if player.condition == 2 or player.condition == 4 }}# | # | {{ endif }}|
| 4 | {{ if player.condition == 2 or player.condition == 4 }}# | # | {{ endif }}
Since they do not receive your evaluations {{ if player.condition == 3 or player.condition == 4 }}and discretionary bonus allocations {{endif}}until after the study has concluded, employees have already been working on their task so that you do not have to wait for them to finish.