The decision

In the beginning, all participants will be randomly divided into groups of four. Thus, in addition to yourself, there will be 3 other participants in your group.

Each participant will receive an initial endowment of 10 Taler. You must then decide how many of these 10 Taler you would like to contribute to a group project of your group and how many you would like to keep for yourself. Each group member will face the same decision situation.

The payout

Any Taler you keep for yourself is yours and will be added to your private account. The following happens with the Taler contributed to the group project: the sum of all contributions will be multiplied by a factor of 2 and then divided equally among all four group members. For example, if 1 Taler is contributed to the group project, the value of that Taler increases to 2 Taler. That amount is then divided equally among all four group members. Consequently, each member of the group receives 0.5 Taler from the group project.

The income of each group member is calculated in the same way and thus consists of two parts:

1. the Taler, that a participant keeps for himself (“income from private account”)

2. the “group project income”. This is calculated as follows:

   [ 2 ∗ ( Sum of all Taler contributed to the project ) ] ∗ 1 4 = 0.5 ∗ ( Sum of all Taler contributed to the project )

The default contribution

Each participant can contribute any integer amount between 0 and 10 Taler to the group project. There is however a “default contribution” which will be automatically contributed to the group project unless you specify another amount. This “default contribution” is 0 Taler [10 Taler]. Thus, if you do not specify another amount, you will contribute 0 Taler [10 Taler] to the group project and keep 10 Taler [0 Taler] for yourself.

[We have chosen the default rule in this way because it is known from empirical and experimental research that people have a tendency to choose, or accept, default settings. Thus, setting a default rule, whereby everything is paid into the group project, leads to an overall increase in contributions and to improved outcomes for the group as a whole. This is exactly what this default contribution is intended to achieve.]

The experiment

The experiment consists of the decision situation described above. In order to make sure that each participant has understood the basic decision situation, you will first be given some control questions on the computer, which you must answer correctly in order to continue.

In the next step, you will see a summarized description of the decision situation on the screen. Right below it, you will see two different buttons: one with the inscription “Default” and the other with the inscription “Select another contribution”. By clicking the “Default” button, you can go directly to the next part of the experiment where you will be informed how to proceed with it. At the same time, you will be making the “default contribution” to the group project.

By clicking the button “Select another contribution”, you have the possibility to change the “default contribution” from 0 Taler [10 Taler] and to specify a different amount to contribute to the group project. The printed slips of paper and the envelopes that are at your seat are intended for this purpose. How to proceed in this case will now be explained. This information will also be displayed on your screen after clicking the button “Select another contribution”.

First, clearly write your ID number on the indicated slip of paper. You can then specify your desired contribution by writing down the following sentence and filling in the gap with the corresponding number:

You can contribute any integer amount between 1 and 10 Taler [0 and 9 Taler] to the group project. Once you are finished, place the folded sheet of paper in an envelope. Open your cabin door slightly so that you can hold out the envelope and put it into the sealed box that we will bring to your cabin. Then click on the “Next” button to proceed to the next part of the experiment.

Please note that it is not possible to go back once you have clicked one of the buttons. Also note that in this experiment you have no time constraints to make a decision. Depending on your decisions, the whole experiment can take between 10 to 40 minutes. Once you are done with the experiment, you may leave.