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Incentives or Persuasion? An Experimental Investigation

Author

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  • Aristidou, Andreas
  • Coricelli, Giorgio
  • Vostroknutov, Alexander

    (RS: GSBE other - not theme-related research, Microeconomics & Public Economics)

Abstract

There are two theoretically parallel ways in which principals can manipulate agents’ choices: with monetary incentives (mechanism design) or Bayesian persuasion (information design). We are interested in whether incentives or persuasion is a better strategy for principals. We conduct an experiment that investigates the behavioral side of the theoretical parallelism between these approaches. We find that principals are more successful when persuading than when incentivizing. Agents appear to be more demanding in mechanism design than in information design. Our analysis also identifies many features that make mechanism and information design behaviorally distinct in practice.

Suggested Citation

  • Aristidou, Andreas & Coricelli, Giorgio & Vostroknutov, Alexander, 2019. "Incentives or Persuasion? An Experimental Investigation," Research Memorandum 012, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2019012
    DOI: 10.26481/umagsb.2019012
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    References listed on IDEAS

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    Cited by:

    1. Alessandra Casella & Evan Friedman & Manuel Perez Archila, 2020. "Mediating Conflict in the Lab," NBER Working Papers 28137, National Bureau of Economic Research, Inc.
    2. Guillaume R. Fréchette & Alessandro Lizzeri & Jacopo Perego, 2022. "Rules and Commitment in Communication: An Experimental Analysis," Econometrica, Econometric Society, vol. 90(5), pages 2283-2318, September.
    3. Zhou, Junya, 2023. "Costly verification and commitment in persuasion," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1100-1142.

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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