ALT Treatments

1. Instructions for
the 2nd set of rounds

2. What’s new. 3rd option for farmers—Alternative
ALT
(Private)
Farmers
Provider
Repair &
maintain
Take water
to grow crop
Irrigation
Infrastructure
(Public)
Take water
to grow crop
• The second set of rounds is identical to the previous rounds except
for one change – there is a third option for farmers.
• Three options that are available to farmers:
1) The first option is that farmers PAY their 10 tokens and then
take water from the public irrigation infrastructure to grow
crop.
2) The second option is that farmers HOLD payment and just
keep their 10 tokens.
3) The THIRD option is that each farmer does not pay the
provider and instead, invests in an alternative water source
that is privately owned. Farmers then take water from this
private alternative water source to grow crop. This choice is
denoted as ALT.
Note
Because this alternative water source is privately owned, the choice ALT
is not affected by the decisions of other players.

3. Farmer
Endowed with 10 tokens
(each round)
HOLD
PAY
Decision Earning
10 tokens
15 tokens,
if the infrastructure is FULLY functional
5 tokens,
if the infrastructure is MINIMALLY functional
ALT 11 tokens
What are Farmer’s decision options and earning outcomes?
• More specifically, at the beginning of each round, each farmer is endowed with 10 tokens.
• Each farmer then decides what to do with this endowment between three options: HOLD, PAY, and ALT.
• If a Farmer decides to HOLD 10 tokens and does not pay to the Provider, the Farmer will just earn 10 tokens.
• If a Farmer decides to PAY 10 tokens, then there are two possible outcomes.
1) When the irrigation infrastructure is fully functional, the Farmer will earn 15 tokens.
2) Otherwise, when the irrigation infrastructure is minimally functional, the Farmer will earn 5 tokens.
• If a Farmer invests to ALT option and does not pay to the Provider, then the farmer will earn 11 tokens.

4. What are Provider’s decision options and earning outcomes?
Provider
INVEST
KEEP
Receive tokens
Farmers
Decision Earning
All received tokens
All received tokens – Investment (15 tokens)
• Provider has the same options as the previous exercise: KEEP and INVEST.
• If the Provider decides to KEEP, all of the collected tokens becomes the provider’s earning.
• If the Provider decides to INVEST, the Provider will take as its income the tokens remaining after investment.
Note
• It costs the Provider 15 tokens to make the needed investment to the irrigation infrastructure in each round.
• The Provider’s earnings cannot be less than zero in this experiment.
Example
• If the Provider receives 20 tokens from two Farmers and decides to invest 15 tokens in the infrastructure,
the Provider will earn the remaining 5 tokens.
20 tokens (Two Farmers Pay)
– 15 tokens (Investment)
5 tokens (Provider’s earning)

5. Next, you will take a short quiz.
After that, you and 3 other players will play the 2nd set of rounds of this decision exercise.