In each round, your chance of achieving a high, medium, or low outcome will depend on your chosen level of effort. In each round, you will choose your effort level from a schedule of 13 effort levels. Each level of effort corresponds to different probabilities that the level of effort will yield a high, medium, and low outcome. The following table shows the effort levels, the cost to you of each effort level, and the probability of achieving a high, medium, or low outcome associated with each effort level.
| Column 1 | Column 2 |
Column 3 |
Column 4 |
Column 5 |
|---|---|---|---|---|
| Your Effort Level | Cost of Effort (in Lira) | Probability of Achieving a High Outcome and Receiving the 2,000 Lira Bonus | Probability of Achieving a Medium Outcome and Receiving the 1,000 Lira Bonus | Probability of Achieving a Low Outcome and Receiving base salary only |
| 1 | 50 | 5% | 30% | 65% |
| 2 | 150 | 10% | 30% | 60% |
| 3 | 250 | 15% | 30% | 55% |
| 4 | 350 | 20% | 30% | 50% |
| 5 | 450 | 25% | 30% | 45% |
| 6 | 550 | 30% | 30% | 40% |
| 7 | 650 | 35% | 30% | 35% |
| 8 | 750 | 40% | 30% | 30% |
| 9 | 850 | 45% | 30% | 25% |
| 10 | 950 | 50% | 30% | 20% |
| 11 | 1050 | 55% | 30% | 15% |
| 12 | 1150 | 60% | 30% | 10% |
| 13 | 1250 | 65% | 30% | 5% |
Notice that each level of effort (column 1) is associated with a monetary cost to you (column 2), and that the higher the level of effort, the higher your monetary cost. However, a higher level of effort also increases your chance of achieving a higher outcome level (columns 3 to 5) and thereby receiving a bonus for a round.
Your actual outcome in each round will be determined in the following manner. After you have selected your effort level for that round, the computer program will randomly select a number between 1 and 100. The number will be compared to the probability of achieving a high, medium and low outcome associated with your chosen level of effort. For a high outcome, if the random number is smaller than or equal to the associated probability, you will achieve the high outcome. For example, if you chose an effort level of 7, the associated probability of achieving a high outcome level is 35%. Thus, you will achieve a high outcome if the computer program selects any number between 1 and 35. You will achieve a medium outcome if the computer program selects a number between and including 36 and 65 (representing the 30% probability in Column 4). You will achieve a low outcome if the computer program selects a number between and including 66 and 100 (representing the 35% probability in column 5).