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In this study, participants will act either as a manager or an internal consultant.
Your role in this study is a Manager.
As a manager, you submit a budget report to the headquarters to request funding for upcoming production. The headquarters knows that the actual product cost is between 40 and 80 dimra per unit. As long as your budgeted cost per unit is between 40 and 80 dimra, your budget will be automatically approved. You receive a salary of 1,000 dimra. In addition, you keep the difference between the funds received (that is, the budgeted cost) and the actual cost. That is:
Your payoff = 1,000 + [reported unit cost − actual unit cost] × 100
For example, if the actual unit cost is 45, and you report a budget of 60, your payoff will be 1,000 + (60-45) ×100 = 2,500.
If your reported budget is lower than the actual cost, the difference is set to zero. In that case, your payoff will be your salary of 1,000 dimra.