On the provision of incentives in finance experiments
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Monetary incentives are a procedural pillar in experimental economics. By applying four distinct monetary incentive schemes in three experimental finance applications, we investigate the impact of an incentive scheme’s salience on results and elicit subjects’ perception of the experienced scheme. We find (1) no differences in results between salient schemes but a significant impact if the incentive scheme is non-salient. (2) The number of previous participations has a significant impact on the perception of the incentive scheme by subjects: it strongly correlates with subjects’ motives for participation, positively contributes to subjects’ understanding of the incentive scheme, but has no influence on subjects’ motivation within the experiment. (3) Subjects favor more salient over less- or non-salient schemes in the gain domain and negatively evaluate high salience in the loss domain.
KeywordsExperimental finance Incentives Salience Asset market Mispricing Information aggregation Investment decision
JEL ClassificationC92 D82 G12 G14
We thank Stefan Palan, Felix Holzmeister, two anonymous referees and conference participants at Experimental Finance 2015 (Nijmegen) for helpful comments. Financial support by the University of Innsbruck (Hypo (Stöckl) and Nachwuchsförderung (Kleinlercher)) and UniCredit (Modigliani Research Grant, 4th edition, Stöckl) is gratefully acknowledged. The authors hereby declare that this paper reports all experimental sessions conducted within the course of this study.
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