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Control Questions 3 out of 3

Control questions related to pages 1–4
You must pass the control questions to proceed to the experiment.

If you have any doubts, you can consult the instructions by clicking the button below.
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Questions
Which of the following statements are correct and which are wrong? Wrong Correct
1. The GREEN player observes the effort choices of the two BLUE players before choosing the rule.
2. Assume the GREEN player sets the slider to +30. If LIGHT BLUE’s work output is 60 and DARK BLUE’s work output is 20, who gets the high payment?
3. Assume the GREEN player sets the slider to -30. If LIGHT BLUE’s work output is 20 and DARK BLUE’s work output is 60, who gets the high payment?
Which of the following statements are correct and which are wrong? Wrong Correct
4. If the GREEN player assigns the high payment to the BLUE player with the higher effort, the GREEN player earns 1.50 tokens.
5. If the GREEN player assigns the high payment to the BLUE player with the higher work output, the GREEN player always earns 1.50 tokens.
Previous pages and slider
1. INTRODUCTION
This is an experiment about decision-making. Please read the following instructions carefully. Everything that you need to know in order to participate in this experiment is explained below. Should you have any difficulties in understanding these instructions please notify us. We will answer your questions at your cubicle.

You will start the experiment with an endowment of £ 3, which is your show-up fee. During the experiment, you can earn more money: there is an experimental currency unit called tokens. Any tokens you earn during the Experiment will be converted to cash at the end of the experiment at the following rate:

2 tokens = £ 1

Please note that communication between participants is strictly prohibited during the experiment. In case you have any questions don't hesitate to ask us.
2. THE SET-UP
As you read these instructions, you will be in a room with a number of other participants. Each participant has been randomly assigned an ID number.

The experiment consists of 20 decision rounds. In each round, you will be randomly assigned to a group of 3 participants, that is, you will be paired with two other participants. Therefore, a group consists of 3 participants and is randomly re-matched at the beginning of each decision round. This implies that the groups will not remain the same throughout the decision rounds.

The identities of the group members are not revealed to each other.

There are 2 types of players, type BLUE players and type GREEN players. Type BLUE players are further divided into subtypes, subtype LIGHT BLUE and subtype DARK BLUE. The difference between the types will be explained shortly. At the beginning of the experiment, each participant will be randomly assigned to play the role of either a LIGHT BLUE, DARK BLUE, or GREEN player. You will be notified about your player type by the computer. You will keep your assigned player type for the entire duration of the experiment.

Each randomly composed group of 3 participants always consists of 1 LIGHT BLUE, 1 DARK BLUE, and 1 GREEN player.
3. THE BLUE PLAYERS
The BLUE players’ task:

The BLUE player decision will consist in selecting an effort level in each of the 20 decision rounds. Each effort level is associated with a monetary cost in tokens. On your desk there is a sheet called “EFFORT CHOICE AND ITS COST FOR BLUE PLAYERS”. This sheet shows 101 numbers from 0 to 100 in the first column. These are your potential effort choices. Associated with each effort number are the costs of choosing an effort level according to the cost shown in the effort table. All BLUE players have the same effort cost table, regardless of their subtype. Note that the higher the effort chosen, the higher the associated cost.

Your effort choice will not be directly revealed to the GREEN player (more details about the decision of the GREEN player will be explained in the next section).

In each decision round, the computer will ask each BLUE player to choose an effort. Therefore, you and the other BLUE player in your group will each separately choose one effort number.

After you have selected your effort, the computer will ask you to generate a random number. You need to do this by hitting the button “GENERATE RANDOM NUMBER”. Hitting the button causes the computer to select one of the 61 numbers that fall between -30 and +30, including 0. Each of these 61 numbers has an equally likely chance of being chosen when you hit the button. Hence, the probability that the computer selects, say, +30 is the same as the probability that it selects -30, 0, -20 or 18.

Each BLUE player will follow the same procedures, so that each participant can generate his or her random number separately. That is, the random number generated by one BLUE player is independent of the random number generated by the other BLUE player.

The sum of your chosen effort and the random number is your performance. Your performance will not be directly revealed to the GREEN player (details about the GREEN player’ decision will be shown below).

There is an additional factor that impacts your total work output. It is a number that represents a specific project assigned to each type of BLUE player. In particular, these are the project-specific numbers for each subtype of the BLUE players:

Subtype of BLUE player Specific Project
LIGHT BLUE 50
DARK BLUE 10
Therefore, the project-specific number for LIGHT BLUE is 50 and for DARK BLUE is 10.

For each type of BLUE player, the project-specific number remains constant for the entire experiment. Since the role of each player is kept constant throughout the entire experiment, the project-specific number is also kept constant for all decision rounds.

Both your performance (which is the sum of your effort choice and your random number) as well as the specific project number contribute to your total work output. The importance of their respective contribution is calculated as follows:

Work output BLUE players:
Work output = 0.6 · Performance + 0.4 · Specific Project
where Performance = effort + player’s random number
In other words, 60% of your work output is given by your performance and 40% is given by your specific project. These shares are the same for both BLUE players, remains constant over all 20 decision rounds, and is known to all players, including the GREEN player.

The GREEN player does not observe your effort choice nor your random number. However, the GREEN player observes your subtype (either LIGHT BLUE or DARK BLUE). The GREEN player also observes the total work output of the BLUE players at the end of each round.

In each round, after you made your effort choices, we will ask you three questions that will help us to understand your effort choice and the reasoning behind.

The BLUE players’ payoff:

The GREEN player must allocate a low payment and a high payment to the BLUE players. The GREEN player does this by choosing an allocation rule that depends on the total work outputs of each BLUE player. The GREEN player is free to choose the allocation rule. The low fixed payment is 0.5 tokens. The high fixed payment is 4.5 tokens. More details about the decision of the GREEN player are found in the next of the instructions.

Player GREEN has an incentive to allocate the higher payment to the BLUE player with the higher effort (that is: The number chosen by the LIGHT BLUE and the DARK BLUE player, independent of the random number and the specific project number). However, recall that the other BLUE player’s effort and your own effort are not revealed to the GREEN player.

The BLUE player's payoff consists of the payment assigned by the GREEN player (either low or high) minus the cost of the effort. Recall that the cost of effort is a function of your effort, see Table 1.

Payoff BLUE player = 4.5 tokens − Cost of effort
Payoff BLUE player = 0.5 tokens − Cost of effort
Your total compensation will be the show-up fee plus your payoff in each round. Note that your total payoff in a certain round can be negative. However, note that you can avoid negative payments through your own decision making if you wish to do so. Also, your final payment for the experiment cannot fall below the show-up fee. You will be paid in cash at the end of the experiment.
4. THE GREEN PLAYER
The GREEN player’s task:

In each round, the GREEN player task is to allocate a high payment and a low payment to the two BLUE players. You do this by choosing an allocation rule that will be implemented. The rule is based on the difference in work outputs between the two BLUE players. You are free to choose any rule you like. However, your payoff depends on the choice you make, as will be explained later in this section.

You implement your allocation rule using a slider, see below:
Difference in output: Light Blue − Dark Blue
Interactive illustration of the slider used by the GREEN player.
DARK BLUE wins
LIGHT BLUE wins
-120
-100
-80
-60
-40
-20
0
20
40
60
80
100
120
0
Move left/right
Here is how it works: You need to decide how to allocate the high payment as a function of the difference in work outputs of the two BLUE players.

If you move the slider to +30, the rule is the following: If LIGHT BLUE’s work output is higher than DARK BLUE’s work output by more than 30 points, LIGHT BLUE receives the high payment. Note: If LIGHT BLUE’s work output is exactly 30 points higher than DARK BLUE’s work output, the high payment is randomly allocated between the two BLUE players.

If you move the slider to -30, the rule is the following: If DARK BLUE’s work output is higher than LIGHT BLUE’s work output by more than 30 points, DARK BLUE receives the high payment. Note: If DARK BLUE’s work output is exactly 30 points higher than LIGHT BLUE’s work output, the high payment is randomly allocated between the two BLUE players.

If you move the slider to 0, the rule is the following: the BLUE player with the higher work output receives the high payment. Note: If both BLUE players have exactly the same work output, the high payment is randomly allocated between the two BLUE players.

In each round, you decide about which allocation rule to implement, and that rule determines who gets the high payment and who gets the low payment. You are free to choose which rule to implement, but your payoff depends on the choice you make, see below.

EXAMPLES:

Assume you set the slider to +30. Then the rule is: If LIGHT BLUE’s work output is higher than DARK BLUE’s work output by more than 30 points, LIGHT BLUE receives the high payment.

If the work output of the DARK BLUE player is 20, and the work output of the LIGHT BLUE player is 40, then the DARK BLUE player will receive the high payment according to the above rule.
If the work output of the DARK BLUE player is 20, and the work output of the LIGHT BLUE player is 60, then the LIGHT BLUE player will receive the high payment according to the above rule.
If the work output of the DARK BLUE player is 20, and the work output of the LIGHT BLUE player is 50, then the high payment is randomly allocated between the two BLUE players according to the above rule.

Assume you set the slider to -30. Then the rule is: If DARK BLUE’s work output is higher than LIGHT BLUE’s work output by more than 30 points, DARK BLUE receives the high payment.

If the work output of the LIGHT BLUE player is 20, and the work output of the DARK BLUE player is 40, then the LIGHT BLUE player will receive the high payment according to the above rule.
If the work output of the LIGHT BLUE player is 20, and the work output of the DARK BLUE player is 60, then the DARK BLUE player will receive the high payment according to the above rule.
If the work output of the LIGHT BLUE player is 20, and the work output of the DARK BLUE player is 50, then the high payment is randomly allocated between the two BLUE players according to the above rule.

The GREEN player’s payoff:

If you allocate the high payment to the player with the higher effort, you receive a payoff of 1.50 tokens in that round. If you allocate the high payment to the player with the lower effort, you receive a payoff of 0 tokens in that round. In case both BLUE players chose the same effort, you will also receive a payoff of 1.50 tokens.

Remember, you will not be informed about the effort chosen by each of the two BLUE players. You also do not observe the individually generated random number of the two BLUE players.

You will only observe the work outputs for each of the BLUE players at the end of each round.

Your total compensation will be the show up fee plus your total payoff of all the decision rounds. Together with the show-up fee, your total payoff will be paid to you at the end of the experiment in cash.
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