Abstract
Why we should pay real monetary rewards to subjects in the laboratory experiment? This question is often raised not only by researchers of different disciplines such as psychology but also by our fellow economics researchers who are not so familiar with experimental methods.
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Sometimes, people may confuse the difference between utility functions with the difference between principles of decision-making. Such people mistakenly suppose that a player with self-interested utility function chooses a particular action A (e.g., defection in Prisoner’s dilemma) and a player with altruistic utility function chooses another action B (e.g., cooperation in Prisoner’s dilemma). But even if a player has self-interested utility function, he may choose cooperation in Prisoner’s dilemma because his principle of decision-making is random choice. So, the distinction between utility function and principle of decision-making is important.
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Kawagoe, T. (2019). Reconsidering Induced Value Theory. In: Kawagoe, T., Takizawa, H. (eds) Diversity of Experimental Methods in Economics. Springer, Singapore. https://doi.org/10.1007/978-981-13-6065-7_7
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