Instructions for Experiment 6
This is an individual experiment. You are endowed with $5 to play this experiment. The experiment involves a choice about whether to keep your $5 or contribute the $5 toward a common pool shared by all other members of the class. On the next page is a sheet on which you will record your choice. Write your name and discussion section at the top of the sheet. If you decide to keep your $5 then you will check the option of keeping your $5. If you decide to contribute your $5 toward the common pool then you will check the option of contributing your $5. Your decision should be kept confidential and you should not discuss your choice with anyone else.
If you contribute your $5 to the common pool then it will be doubled to $10 and shared equally by all of your classmates (other than yourself). For example, if there are 201 people in the class and you contribute your $5 to the common pool then each of the other 200 people in the class will share $10 as a result of your contribution, which will provide each person with $.05. This applies to every person in the class. Thus, the payoff to each individual in the class will depend on how many of the individualís classmates contribute to the common pool and what the individual does in terms of contributing his/her $5 endowment to the common pool.
Your total earnings on the experiment equal your initial endowment of $5 minus your contribution to the common pool (0 or $5) plus your share of the contributions by your classmates into the common pool. There is a simple way to think about how much money you will receive from contributions by your classmates into the common pool. It equals the fraction of your classmates that contribute to the common pool times $10. Thus, if all of your classmates contribute their $5 to the common pool then you will receive $10 from the common pool. Alternatively, if half of your classmates contribute to the common pool then you will receive $5 from the common pool, whereas if none of your classmates contribute to the common pool then you will receive nothing from the common pool.
Decide whether you want to keep your $5 or contribute it to the common pool and record your choice on the next sheet. At the end of the class hand in only the next sheet.
Name ______________________________ Section_____________
CHECK ONE OF THE FOLLOWING TWO CHOICES
I keep my $5 endowment ___________________
I contribute my $5 endowment to the common pool____________________