{% extends "global/Base.html" %} {% load staticfiles otree_tags %} {% block title %} Task Instructions - Project Cost Reporting: {% endblock %} {% block content %}
As mentioned earlier, you are assuming the role of one of two division managers in a manufacturing company. You manage Division {% if type == 1 %}A{% else %}B{% endif %}. One of your responsibilities is to keep track of the progress and cost of your division’s single active project, {% if type == 1 %}Project A{% else %}Project B{% endif %}. Given the work that takes place between divisions, you are also able to observe the cost of the other division’s active project, {% if type == 1 %}Project B{% else %}Project A{% endif %}. {% if condition == 5 or condition == 6 %}You and the manager of the other division each have one employee working for you, as pictured in the organizational chart below, who also knows the actual cost of the active project in their division.{% endif %} {% if condition < 3 %}The role of the other manager in your company is being assumed by another participant in this experiment {% else %}The roles of all other members of your company are being assumed by other participants in this experiment{% endif %} with whom you will be randomly matched.
{% if condition < 3 %} {% if type == 1 %}
{% if condition == 5 or condition == 6 %}{% else %}
{% endif %}
The company cannot monitor all activities, and therefore relies on the division managers to report the costs of their projects, at which time the company transfers funds to cover those project costs. The company cannot observe the actual cost of any division’s project in any period, but does know based on project scope and past results that each project’s cost in each period will range between 20,000 and 100,000 experimental dollars. Experimental dollars convert to real dollars at a rate of 5,000 experimental dollars = $0.25 when payouts are determined. You will learn the actual cost of your project and the other division’s project (which will both be amounts between 20,000 and 100,000 experimental dollars) prior to making your cost reports to the company.
{% else %}{% if condition == 5 or condition == 6 %} The company owner cannot monitor all activities within the company, and therefore relies on the division managers to report the costs of their projects, at which time the owner transfers funds to cover those project costs. The owner cannot observe the actual cost of any division’s project in any period, but does know based on project scope and past results that each project’s cost in each period will range between 20,000 and 100,000 experimental dollars. Experimental dollars convert to real dollars at a rate of 5,000 experimental dollars = $0.50 when payouts are determined. You will learn the actual cost of your project and the other division’s project (which will both be amounts between 20,000 and 100,000 experimental dollars) prior to making your cost reports to the owner. {% else %} The company owner cannot monitor all activities within the company, and therefore relies on the division managers to report the costs of their projects, at which time the owner transfers funds to cover those project costs. The owner cannot observe the actual cost of any division’s project in any period, but does know based on project scope and past results that each project’s cost in each period will range between 20,000 and 100,000 experimental dollars. Experimental dollars convert to real dollars at a rate of 5,000 experimental dollars = $0.25 when payouts are determined. You will learn the actual cost of your project and the other division’s project (which will both be amounts between 20,000 and 100,000 experimental dollars) prior to making your cost reports to the owner. {% endif %}
{% endif %}
{% if condition > 2 %}
The company owner begins each period with a pre-determined amount of experimental dollars, from which they fund each division’s project, pay each division manager a fixed salary of {% if condition == 5 or condition == 6 %}15,000{% else %}30,000{% endif %} experimental dollars
{% if condition == 5 or condition == 6 %}and each manager’s employee a fixed salary of 10,000 experimental dollars{% endif %}, and keep any remaining experimental dollars for themselves. Given their allocation, the minimum amount a company owner could have remaining in any
period is the equivalent of $1.50. To encourage accurate reporting of project costs, the company owner requires each
of the two division managers to report the cost of their own project, as well as the cost of the other division’s project, to them each period. The outcome of
the reporting process is then determined as follows:
{% else %}
The company pays each division manager a fixed salary of 30,000 experimental dollars in each period. To encourage accurate reporting of project costs, the company requires each of the two division managers to report the cost of their own project, as well as the cost of the other division’s project, each period. The outcome of
the reporting process is then determined as follows:
{% endif %}
| 1. | If the two division managers’ cost reports for a particular project (in either division) match, the company {% if condition > 2 %}owner {% endif %}transfers funds equal to those cost reports to the manager of that project. For example: |
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{% if type == 1 %}
{% if condition < 3 %}
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| 2. | If the two division managers’ cost reports for a particular project do not match, an audit is conducted. The audit determines with certainty the actual cost of the project, which the company {% if condition > 2 %}owner {% endif %} transfers to the manager of that project. For example: |
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{% if type == 1 %}
{% if condition < 3 %}
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| 3. | If any audits are conducted, any manager found to be misreporting the cost of any audited project receives no compensation for the period. However, any manager found via audit to be reporting accurately will receive an audit bonus of {% if condition == 5 or condition == 6 %}45,000{% else %}90,000{% endif %} experimental dollars per project {% if condition < 3 %}.{% else %}, which is NOT paid from the owner’s allocation of funds.{% endif %} |
Given the {% if condition < 3 %}company's{% else %}company owner’s{% endif %} knowledge of historical project costs, you must report project costs within the range of 20,000 to 100,000, but do not have to report costs equal to the actual project costs. You {% if condition == 5 or condition == 6 %}split (50%/50%) with your employee{% else %}keep{% endif %} any additional funds that you obtain above the actual cost of your project. Consider the following examples:
| 1. | You and Manager {% if type == 1 %}B{% else %}A{% endif %} submit matching cost reports that show higher-than-actual project costs: |
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{% if type == 1 %}
{% if condition < 3 %}
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| Note that in this example, the company {% if condition > 2 %}owner {% endif %}also pays you and Manager {% if type == 1 %}B{% else %}A{% endif %} your fixed salary of {% if condition == 5 or condition == 6 %}15,000{% else %}30,000{% endif %} each. {% if condition == 5 or condition == 6 %}The company owner also pays Employees A and B their fixed salary of 10,000 each.{% endif %} | |
| 2. | You and Manager {% if type == 1 %}B{% else %}A{% endif %} submit matching cost reports that show project costs equal to actual costs: |
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{% if type == 1 %}
{% if condition < 3 %}
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| Note that in this example, the company {% if condition > 2 %}owner {% endif %}also pays you and Manager {% if type == 1 %}B{% else %}A{% endif %} your fixed salary of {% if condition == 5 or condition == 6 %}15,000{% else %}30,000{% endif %} each. {% if condition == 5 or condition == 6 %}The company owner also pays Employees A and B their fixed salary of 10,000 each.{% endif %} | |
| 3. | You and Manager {% if type == 1 %}B{% else %}A{% endif %} submit cost reports that do not match. Manager {% if type == 1 %}B{% else %}A{% endif %}’s reports show higher-than-actual costs: |
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{% if type == 1 %}
{% if condition < 3 %}
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| Note that in this example, the company {% if condition > 2 %}owner {% endif %}also pays you your fixed salary of {% if condition == 5 or condition == 6 %}15,000{% else %}30,000{% endif %}. You also receive an audit bonus of {% if condition == 5 or condition == 6 %}90,000{% else %}180,000{% endif %} {% if condition > 2 %}, not paid by the company owner{% endif %}{% if condition == 5 or condition == 6 %}, and not split with your employee{% endif %}, for accurately reporting the costs of both projects. Manager {% if type == 1 %}B{% else %}A{% endif %} receives no compensation for the period, since they were found to have misreported the costs of both projects. {% if condition == 5 or condition == 6 %}The company owner also pays Employees A and B their fixed salary of 10,000 each.{% endif %} |
You will complete this task for between three and seven identical periods. {% if condition < 3 %} You will be randomly re-matched with a different manager (partner) in each period.
{% elif condition < 5 %}You will be randomly re-matched with a different manager (partner) and different company owner in each period.
{% else %}You will remain matched with the same manager (partner) and same company owner in all periods of this task.{% endif %} Each period will operate in the following manner:
| 1. |
{% if condition < 3 %} You will be randomly re-matched with a different manager (partner). {% elif condition < 5 %}You will be randomly re-matched with a different manager (partner) and different company owner. {% endif %} {% if type == 1 %} |
| 2. |
{% if type == 1 %}
{% if condition < 3 %}
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| 3. |
{% if type == 1 %}
{% if condition == 1 %}
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| 4. |
{% if type == 1 %}
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| 5. |
{% if type == 1 %}
{% if condition < 3 %}
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| 6. |
{% if type == 1 %}
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