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To make sure that everyone understands the instructions for Stage I, please take a moment to answer the following questions. Once everyone has responded correctly, we will proceed to the first round of Stage 1.

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  1. Suppose that the Quality of the investment opportunity in a round is Low. Suppose that the total number of Investors who invested (Total Investors) is 2.
    1. What is the payoff for a Investor who invested?
    2. What is the payoff for a Investor who kept the endowment?
    3. What is the payoff for the Advisor?
  2. Suppose that the Quality of the investment opportunity in a round is High. Suppose that the total number of Investors who invested (Total Investors) is 4.
    1. What is the payoff for a Investor who invested?
    2. What is the payoff for a Investor who kept the endowment?
    3. What is the payoff for the Advisor?
  3. Suppose that the Quality in a round is Medium.
    1. The estimate of investment quality that the Advisor receives Medium is 5/6 chance.
    2. The estimate of investment quality that the Advisor receives will never be High.
    3. The Investors can see what estimate the Advisor has received when they make their choices.
  4. The Advisor will first make their choices for all possible values of Quality, and then the computer will play out the round for them based on their choices and the randomly drawn investment quality and quality estimate.
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