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Incentives in Experiments: A Theoretical Analysis

Author

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  • 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)

Abstract

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.

Suggested Citation

  • Paul J. Healy & Yaron Azrieli & Christopher P. Chambers, 2016. "Incentives in Experiments: A Theoretical Analysis," Working Papers 16-03, Ohio State University, Department of Economics.
    • Handle: RePEc:osu:osuewp:16-03
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    More about this item

    Keywords

    Experimental design; decision theory; mechanism design;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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