Instructions

You have been randomly and anonymously paired with another player. Each of you will be randomly assigned to be Participant A or Participant B. You will learn your role before making any decision.

Participant A will propose a contract to B that has 2 components:

  • Fixed Payment, which can be any number from -30 to 30
  • Return Share, which can be a multiple of 10%, that is 10%, 20%, … , 90%, or 100%

Note that a negative fixed payment means that Participant B will have to pay the amount to Participant A.

Once Participant A has submitted the contract, Participant B must decide whether to accept or to reject it. If rejected, A will receive nothing while B will receive 10 points. If accepted, Participant B then chooses:

  • Effort Level, which can be any whole number from 1 to 10

Effort is costly only to Participant B and determines the total return, which will be apportioned according to the proposed return share. The following table shows the relationship between B's effort, the cost of effort, and the resulting total return:

Effort Level 1 2 3 4 5 6 7 8 9 10
Effort Cost 0 4 8 12 18 24 32 40 50 60
Total Return 14 28 42 54 70 84 98 112 126 140

Given that the contract is accepted, Participant A will receive:
(100% – [B’s Return Share in %]) × [Total Return] – [B’s Fixed Payment]
and Participant B will receive:
[B's Return Share in %] × [Total Return] + [B's Fixed Payment] – [B's Effort Cost]