Whose money is it anyway? Using prepaid incentives in experimental economics to create a natural environment

Mosi Rosenboim, Tal Shavit

Research output: Contribution to journalArticlepeer-review

36 Scopus citations

Abstract

Simulating a real world environment is of utmost importance for achieving accurate and meaningful results in experimental economics. Offering monetary incentives is a common method of creating this environment. In general, experimenters provide the rewards at the time of experiment. In this paper, we argue that receiving the reward at the time of the experiment may lead participants to make decisions as if the money they are using were not their own. To solve this problem, we devised a "prepaid mechanism" that encourages participants to use the money as if it were their own.

Original languageEnglish
Pages (from-to)145-157
Number of pages13
JournalExperimental Economics
Volume15
Issue number1
DOIs
StatePublished - 1 Mar 2012

Keywords

  • Experiment
  • Financial decision making
  • Loss aversion
  • Monetary incentive
  • Reward
  • Second-price auction
  • Trust game

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)

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