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Reporting Error
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There is a reporting error in the system that takes the following form:
At the end of each period, your actual payoff will end up higher or lower than the payoff based on your work
level choice. The actual payoff will be calculated this way:
Actual Payoff = Work Level Choice Payoff ± (Work Level Choice Payoff x Work Level Choice x 10%)
In other words, your actual payoff in Lira will be higher (lower) than the payoff by a factor of the work level you
chose multiplied by 10%. Whether the error is positive or negative is equally likely each period. There is a 50%
chance of each type of error each period.
The following table provides some example scenarios:
| If you select work level… |
Your initial payoff will be… |
But, the reporting error is… |
So, your actual payoff will be either… |
| 2 |
75 (80-5) |
±15 (75 x 20%) |
60 or 90 |
| 5 |
90 (110-20) |
±45 (90 x 50%) |
45 or 135 |
| 10 |
95 (160-65) |
±95 (95 x 100%) |
0 or 190 |
| Work Level |
Reward |
Cost |
Payoff |
| 0 |
60 |
0 |
60 |
| 1 |
70 |
2 |
68 |
| 2 |
80 |
5 |
75 |
| 3 |
90 |
9 |
81 |
| 4 |
100 |
14 |
86 |
| 5 |
110 |
20 |
90 |
| 6 |
120 |
27 |
93 |
| 7 |
130 |
35 |
95 |
| 8 |
140 |
44 |
96 |
| 9 |
150 |
54 |
96 |
| 10 |
160 |
65 |
95 |
Visually, the payoff structure with the reporting errors looks like this:
Important: Your work level choice and the reporting error are the only two factors that determine your payoff
in each period.
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