Incentives in Experiments: A Theoretical Analysis

Date: 2016-01
By: Paul J. Healy (Department of Economics, Ohio State University)
Yaron Azrieli (Department of Economics, Ohio State University)
Christopher P. Chambers (Department of Economics, University of California, San Diego)
URL: http://d.repec.org/n?u=RePEc:osu:osuewp:16-03&r=net
Experimental economists currently lack a convention for how to pay subjects in experiments with multiple tasks. We provide a theoretical framework for analyzing this question. Assuming monotonicity (dominated gambles are never chosen) and nothing else, we prove that paying for one randomly-chosen problem — the random problem selection (RPS) mechanism — is essentially the only incentive compatible mechanism. Paying for every period is similarly justified when we assume only a ‘no complementarities at the top’ (NCaT) condition. To help experimenters decide which is appropriate for their particular experiment, we also discuss empirical tests of these two assumptions.
Keywords: Experimental design, decision theory, mechanism design
JEL: C90 D01 D81

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