In this part you are in a group of 3 players. Every player has an endowment of 100 points. Each point is worth 2.5 cents (40 points=$1). Your task is to choose how many of your 100 points you wish to contribute to a project and how many to keep for yourself.
The project creates 1.5 times more (50% more) points than the sum of all contributions. The amount that is created is then divided equally among all three group members, independently of their individual contributions. The expression below shows how your earnings are calculated:
(100 – Your contribution) + (Sum of all contributions) * 1.5 / 3
So, whatever you don’t contribute, you keep. You also receive one-third of 1.5 times the total contributions made.
Therefore, your contribution to the project raises the earnings of all other group members, and the contributions of others raise your earnings.
Example. Suppose that the sum of all individual contributions to the project is 150 points. The project would return 150*1.5 = 225 points.
This amount would be divided equally among the three group members. Hence, each member of the group earns 225/3=75 points plus whatever amount they have left after their individual contribution.
You will see the results at the end of today’s session, after you have completed all parts. Note also:
- no one will see your choices in this Part 1;
- your earnings or choices in Part 1 cannot affect your earnings in Parts 2 and 3, which are totally separate.