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You will now be working on a new project with the same employee from Stage 1.
The company expects that the project will be profitable, but the level of profitability depends on the quality of the job that you and the other employee do. The higher the quality of the project, the higher the team bonus your company will pay as a reward. You and the other employee will equally split any team bonus paid out to your team by the company.
You and the other employee have two possible approaches (HIGH or LOW) available for working on the project. You can think of the approaches as levels of effort. Choosing HIGH implies a significant amount of time and effort on your part, and it is therefore more costly to you. The quality of the final project depends on the approaches you and the other employee choose.
The decision task is the same in each period of Stage 2. There will be 12 periods in total for Stage 2, and you will be paid for all 12 periods. The specific compensation plan is outlined after the next short quiz.
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