WELCOME

No Talking Allowed
Now that the experiment has begun, we ask that you do not talk. If you have a question after we finish reading the instructions, please raise your hand and the experimenter will approach you and answer your question in private.

Complete Privacy
This experiment is structured so that no one, including the experimenters or the other participants, will ever know the personal decision or money earnings of anyone in the experiment. This is accomplished by a procedure in which you collect your earnings, contained in a sealed envelope, from a numbered mailbox that only you have the key for. Your privacy is guaranteed because neither your name nor your student ID number will appear on any form that records your decisions or your earnings in this experiment. The only identifying mark that will be used is the identification number on the mailbox key that has been given to you. You will collect your money payoffs with privacy by using a key, which opens a mailbox located in a room adjacent to this room. The key and mailbox are labeled with the same identification number. You are the only person who knows your identification number.

Random Matching and Anonymity
Each person will be randomly matched with 3 other people to form a group. Thus, each group will contain 4 individuals. No one will learn the identity of the persons in his/her decision group. In each group, 3 individuals will be randomly assigned the role of Type X decision makers. The remaining group member will be assigned the role of Type Y decision maker.

Starting Balances
Each individual begins with an endowment of 10 tokens worth $1 each, yielding an Individual Fund of $10. Each four person group begins with a Group Fund of $0.

Sequential Decisions for Type X and Y
The three Type X persons in a group make their decisions first. After the Type X persons make their decisions, the Type Y person in a group makes his/her decision, after being shown the decisions of each of the anonymous Type X persons in his/her group.

Decision Task for the 3 Type X Decision Makers in a Group
Each Type X person will decide independently and privately whether or not to move any of his/her tokens from his/her own Individual Fund into the Group Fund. Each Type X person can move up to a maximum of 10 tokens to the Group Fund. Each token that a Type X person adds to the Group Fund reduces the value of his/her Individual Fund by $1. However, each token added to the Group Fund by a Type X person increases the value of the Group Fund by $3.

Each decision must be in whole tokens. That is, each Type X person can add 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10 tokens to the Group Fund.

Decision Task for the 1 Type Y Decision Maker in a Group
The 1 Type Y person will be shown the decisions of each of the 3 anonymous Type X persons in his/her group. The Type Y person will then decide independently and privately whether or not to move any of his/her tokens from his/her own Individual Fund to the Group Fund OR move to his/her own Individual Fund the tokens that were added to the Group Fund by the 3 Type X persons.

The Type Y person can add up to a maximum of 10 tokens to the Group Fund. As with the Type X persons, each token that the Type Y person adds to the Group Fund reduces the value of his/her own Individual Fund by $1. However, each token added to in the Group Fund by the Type Y person increases the value of the Group Fund by $3. Each decision must be in whole tokens. That is, the Type Y person can add 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10 tokens to the Group Fund.

Each token subtracted from the Group Fund by the Type Y person, increases the value of his/her Individual Fund by $1, and decreases the value of the Group Fund by $3. Each decision must be in whole tokens. The Type Y person can subtract from the Group Fund an amount between 0 and the total number of tokens placed in the Group Fund by the 3 anonymous Type X persons. That is, the Type Y person can subtract 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 ….. up to a total limit of tokens that would reduce the number of tokens in the Group Fund to 0, and the value of the Group Fund to $0.

Earnings
After all persons in the group make their decisions, the Group Fund will be divided equally among all individuals in the group. For each individual in the group, those earnings will be combined with the amount that the individual has remaining in his/her own Individual Fund.

Thus, a person’s total earnings will equal the ending dollar value of tokens in his/her own Individual Fund plus one-fourth of the ending dollar value of tokens in the Group Fund.

Three examples illustrate how the tokens moved to the Group Fund are related to the values of the Individual and Group Funds.

• If a Type X or Type Y person adds 0 tokens to the Group Fund, that reduces the value of his/her Individual Fund by $0 and adds $0 to the value of the Group Fund.
• If a Type X or Type Y person adds 5 tokens to the Group Fund, that reduces the value of his/her Individual Fund by $5 and adds $15 to the value of the Group Fund.
• If a Type X or Type Y person adds 10 tokens to the Group Fund, that reduces the value of his/her Individual Fund by $10 and adds $30 to the value of the Group Fund.

Three additional examples illustrate how the range of choices available to the 1 Type Y person are affected by the decisions made by the 3 Type X persons.

• For illustration purposes only, suppose the 3 Type X persons in a group add zero tokens to the Group Fund. In this particular case, the Type Y person could add up to 10 tokens to the Group fund, but there would be no tokens for the Type Y person to subtract from the Group Fund. Each token that Type Y adds to the Group Fund increases the value of the Group Fund by $3 and decreases the value of his/her Individual Fund by $1.
• For illustration purposes only, suppose the 3 Type X persons in a group add 15 tokens to the Group Fund, which increases the value of the Group Fund by $45. In this particular case, the Type Y person could either add up to 10 tokens to the Group fund or could subtract any whole token amount between 0 tokens and 15 tokens from the Group Fund. Each token that Type Y adds to the Group Fund increases the value of the Group Fund by $3 and decreases the value of his/her Individual Fund by $1. Each token that Type Y subtracts from the Group Fund reduces the value of the Group Fund by $3 and increases the value of his/her Individual Fund by $1.
• For illustration purposes only, suppose the 3 Type X persons in a group add 30 tokens to the Group Fund, which increases the value of the Group Fund by $90. In this particular case, the Type Y person could either add up to 10 tokens to the Group Fund or could subtract any whole token amount between 0 tokens and 30 tokens from the Group Fund. Each token that Type Y adds to the Group Fund increases the value of the Group Fund by $3 and decreases the value of his/her Individual Fund by $1. Each token that Type Y subtracts from the Group Fund reduces the value of the Group Fund by $3 and increases the value of his/her Individual Fund by $1.

This decision task will be completed only once.

After you are sure that you understand these instructions, click on the Finished Reading Instructions box in the upper left corner of your monitor screen to signal that you are ready to make your decision.