Experimental Design Details
The study comprises three stages. In the first, participants will be asked to complete a simple typing task in which arrows will be presented on the screen and the participant will need to press the corresponding arrow key on their keyboard to proceed. These arrows will appear at random locations on the screen so that the task will require focus and effort. Ego relevance will be induced by informing participants that faster reactions to the arrows appearing will result in higher output on the task and providing examples of the real-life benefits of having quick reflexes. Participants will be informed that they will be paid a particular piece rate per arrow key pressed, and that piece rate will either be the same for everyone or will be randomly, independently assigned to each participant, with equal probability of each scenario. However, participants will not know which piece rate they have been assigned, and they will not be informed of how many arrows they have pressed successfully while the task is in progress. They will proceed with the task for 5 minutes.
At the end of the first round of the task, participants will be asked how many arrows they believe they completed, and how they expect their earnings to compare to other participants' based on each possible piece rate structure. Then, participants will be informed of their total earnings from the round (not the number of tasks they completed or the piece rate they were assigned), and the relative rank of their earnings relative to the earnings of all other participants in the session. (For example, participants will see a screen that says "you earned $7.55 in this round, which ranks 10th out of the 32 participants in the session.") After learning of their total earnings, participants will be asked in an incentivized way if they believe the assigned piece rate was equal for all participants or randomly determined for each participant. If they believe the payment was different for each participant, they will be asked if they believe their randomly assigned piece rate was less than or greater than the expected value of the distribution from which the piece rates were drawn.
In the second stage, I will elicit participants' willingness to accept (WTA) to forego the second round of the task and any associated earnings. This will be done with a price list where each row asks the participant to choose between receiving a certain amount of money or entering the second round of the task. Then one row of the list will be randomly selected for implementation.
Participants who enter the third stage, based on the realization of their choice in the second stage, will complete another 5-minute round of the task for payment. Those who did not enter will be asked to wait for the third stage to conclude. Then, upon conclusion of the third stage, each participant's final payment will be revealed to them privately, and participants will be paid.
Based on the conceptual framework, the study is designed to test the following hypotheses: (1) individuals who overestimate their task output will be more likely to believe their assigned piece rate was random and less than the expected value of the distribution; (2) individuals' WTA will be decreasing in the difference between their expected and realized earnings; and (3) conditional on entering the third stage, disappointed individuals (those for whom actual earnings in stage 1 << their perceived output x the expected value of the piece rate) will differentially decrease their intensity of effort, as measured by their average reaction time to press an arrow key.