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Incentives

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  • James C. Cox
  • Vjollca Sadiraj

Abstract

Incentives are a major part of what defines the "economics" part in experimental economics. We discuss experimental approaches to addressing confounds that can arise with incentive payments to experimental subjects. They include choice of salient payoff levels to insure dominance, experience to promote understanding, alternative institutional formats to vary accessibility of payoff information, and lottery payoffs to induce risk neutrality. We examine issues that arise with response mode effects and game form misconception. Choice of which instruments to use and when to use them is part of the art of experimental design that should be informed by the research questions of interest and the type of confounds that are expected in a given environment and economic institution. One confound that is frequently not addressed in the literature is use of payoff protocols that are not incentive compatible. We call attention to this issue.

Suggested Citation

  • James C. Cox & Vjollca Sadiraj, 2018. "Incentives," Experimental Economics Center Working Paper Series 2018-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:exc:wpaper:2018-01
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    File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2018-01.pdf
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    Keywords

    experiments; methodology; incentives;

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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