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More Money, More Problems? Can High Pay Be Coercive and Repugnant?

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  • Sandro Ambuehl
  • Muriel Niederle
  • Alvin E. Roth

Abstract

IRBs can disallow high incentives they deem coercive. A vignette study on MTurk concerning participation in medical trials shows that a substantial minority of subjects concurs. They think high incentives cause more regret, and that more people would be better off without the opportunity to participate. We model observers as judging the ethicality of incentives by partially using their own utility. The model predicts that payments are repugnant only to the extent that they affect the participation decision, and more so for larger transactions. Incentivizing poorer participants is more repugnant, and in-kind incentives are less repugnant than monetary incentives.

Suggested Citation

  • Sandro Ambuehl & Muriel Niederle & Alvin E. Roth, 2015. "More Money, More Problems? Can High Pay Be Coercive and Repugnant?," American Economic Review, American Economic Association, vol. 105(5), pages 357-360, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:357-60
    Note: DOI: 10.1257/aer.p20151034
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    References listed on IDEAS

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    1. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias in Predicting Future Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1209-1248.
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    Cited by:

    1. Sandro Ambuehl & B. Douglas Bernheim & Axel Ockenfels, 2019. "Projective Paternalism," NBER Working Papers 26119, National Bureau of Economic Research, Inc.
    2. Nicola Lacetera, 2016. "Incentives and Ethics in the Economics of Body Parts," NBER Working Papers 22673, National Bureau of Economic Research, Inc.
    3. Philip J Held & Frank McCormick & Glenn M Chertow & Thomas G Peters & John P Roberts, 2018. "Would government compensation of living kidney donors exploit the poor? An empirical analysis," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-14, November.
    4. Elias, Julio & Lacetera, Nicola & Macis, Mario, 2016. "Efficiency-Morality Trade-Offs in Repugnant Transactions: A Choice Experiment," IZA Discussion Papers 10187, Institute of Labor Economics (IZA).
    5. Michael A. Clemens, 2018. "Testing for Repugnance in Economic Transactions: Evidence from Guest Work in the Gulf," The Journal of Legal Studies, University of Chicago Press, vol. 47(S1), pages 5-44.
    6. repec:cup:judgdm:v:14:y:2019:i:2:p:130-134 is not listed on IDEAS
    7. Cassar, Lea & Meier, Stephan, 2017. "Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives," IZA Discussion Papers 11203, Institute of Labor Economics (IZA).
    8. Nana Adrian & Ann-Kathrin Crede & Jonas Gehrlein, 2019. "Market Interaction and the Focus on Consequences in Moral Decision Making," Diskussionsschriften dp1905, Universitaet Bern, Departement Volkswirtschaft.
    9. Janine Hoffart & Benjamin Scheibehenne, 2019. "Pill or bill? Influence of monetary incentives on the perceived riskiness and the ethical approval of clinical trials," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(2), pages 130-134, March.
    10. Alain Naef, 2020. "Blowing against the Wind? A Narrative Approach to Central Bank Foreign Exchange Intervention," Working Papers 0188, European Historical Economics Society (EHES).
    11. Itai Ashlagi & Alvin E. Roth, 2021. "Kidney Exchange: An Operations Perspective," Management Science, INFORMS, vol. 67(9), pages 5455-5478, September.
    12. Sandro Ambuehl, 2017. "An Offer You Can't Refuse? Testing Undue Inducement," CESifo Working Paper Series 6296, CESifo.
    13. CARBALLA SMICHOWSKI Bruno & DUCH BROWN Nestor & MARTENS Bertin, 2021. "To pool or to pull back? An economic analysis of health data pooling," JRC Working Papers on Digital Economy 2021-06, Joint Research Centre.
    14. Chen Lian & Yueran Ma & Carmen Wang, 2019. "Low Interest Rates and Risk-Taking: Evidence from Individual Investment Decisions," The Review of Financial Studies, Society for Financial Studies, vol. 32(6), pages 2107-2148.
    15. Shengwu Li, 2017. "Ethics and market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 705-720.
    16. Julio J. Elías & Nicola Lacetera & Mario Macis, 2019. "Paying for Kidneys? A Randomized Survey and Choice Experiment," American Economic Review, American Economic Association, vol. 109(8), pages 2855-2888, August.
    17. Yan Chen & Peter Cramton & John A. List & Axel Ockenfels, 2021. "Market Design, Human Behavior, and Management," Management Science, INFORMS, vol. 67(9), pages 5317-5348, September.
    18. Kübler, Dorothea & Schmid, Julia & Stüber, Robert, 2018. "Gender discrimination in hiring across occupations: a nationally-representative vignette study," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55, pages 215-229.
    19. Christina Leuker & Lasare Samartzidis & Ralph Hertwig & Timothy J Pleskac, 2020. "When money talks: Judging risk and coercion in high-paying clinical trials," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-15, January.
    20. Katharina Huesmann & Achim Wambach, 2015. "Constraints on Matching Markets Based on Moral Concerns," CESifo Working Paper Series 5356, CESifo.
    21. Kübler, Dorothea & Erkut, Hande, 2022. "Repugnant Transactions: The Role of Agency and Extreme Consequences," VfS Annual Conference 2022 (Basel): Big Data in Economics 264052, Verein für Socialpolitik / German Economic Association.
    22. Christine L. Exley & Judd B. Kessler, 2018. "Equity Concerns are Narrowly Framed," NBER Working Papers 25326, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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