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Leaving Money on the Table

Author

Listed:
  • Alston, Mackenzie

    (University of Illinois at Urbana-Champaign)

  • Deryugina, Tatyana

    (University of Illinois at Urbana-Champaign)

  • Shurchkov, Olga

    (Wellesley College)

Abstract

There is much disagreement about the extent to which financial incentives motivate study participants. We elicit preferences for being paid for completing a survey, including a one-in-twenty chance of winning a $100 electronic gift card, a guaranteed electronic gift card with the same expected value, and an option to refuse payment. More than twice as many participants chose the lottery as chose the guaranteed payment. Given that most people are risk averse, this pattern suggests that factors beyond risk preferences—such as hassle costs—influenced their decision-making. Almost 20 percent of participants actively refused payment, demonstrating low monetary motivation. We find both systematic and unobserved heterogeneity in the characteristics of who turned down payment. The propensity to refuse payment is more than four times as large among individuals 50 and older compared to younger individuals, suggesting a tradeoff between financially motivating participants and obtaining a representative sample. Overall, our results suggest that modest electronic gift card payments violate key requirements of Vernon Smith’s induced value theory.

Suggested Citation

  • Alston, Mackenzie & Deryugina, Tatyana & Shurchkov, Olga, 2025. "Leaving Money on the Table," IZA Discussion Papers 17812, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp17812
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    More about this item

    Keywords

    induced value theory; motivation; incentives;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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