Y2K Bibliography of Experimental Economics and Social Science
Payoff Incentive Effects

updated December 29, 1999
Charles A. Holt, cah2k@virginia.edu, suggestions and corrections welcome
(for online and personal use only)

Anderson, Lisa R. (1999) “Payoff Effects in Information Cascade Experiments,” College of William and Mary, Discussion Paper. Keywords: experiments, decisions, information cascades, methodology, incentive effects, logit equilibrium. Abstract: The paper reports the effects of changing payoff levels on behavior in information cascade experiments. Offering a $2 payment for a correct prediction lowers logit error rates estimated with a logit model, below levels obtained with hypothetical incentives. A doubling the payoff to $4 does not produce a further reduction in the error rates. Email Contact: lrande@mail.wm.edu

Battalio, Raymond C., and John H. Kagel (1985) “Consumption-Leisure Tradeoffs of Animal Workers: Effects of Increasing and Decreasing Marginal Wage Rates in a Closed Economy Experiment,” in Research in Experimental Economics, Vol. 3, edited by V. L. Smith, Greenwich, Conn.: JAI Press, 1-29. Keywords: experiments, decisions, labor/leisure choice, incentive effects, animal subjects. Email Contact: rcb@esl1.tamu.edu

Beattie, J., and Graham Loomes (1997) “The Impact of Incentives Upon Risky Choice Experiments,” Journal of Risk and Uncertainty, 14155-168. Keywords: experiments, decisions, lottery choice, random lottery method, incentive effects, methodology.

Blumenschein, K. (1997) “Hypothetical versus Real Payments in Vickrey Auctions,” Economics Letters, 56:2 (October), 177-180. Keywords: experiments, methodology, auctions, incentive effects.

Bolle, Friedel (1990) “High Reward Experiments without High Expenditure for the Experimenter?,” Journal of Economic Psychology, 11:2 (June), 157-167. Keywords: experiments, methodology, incentives. Email Contact: bolle@euv-frankfurt-o.de

Burke, M. S. (1996) “An Experimental Note on the Allais Paradox and Monetary Incentives,” Empirical Economics, 21:4 617-632. Keywords: experiments, decisions, lottery choice, Allais paradox, incentive effects.

Cooper, David J., John H. Kagel, Wei Lo, and Qing Liang Gu (1999) “Gaming Against Managers in Incentive Systems: Experimental Results with Chinese Students and Chinese Managers,” American Economic Review, 89:4 (September), 781-804. Keywords: experiments, game theory, signalling games, strategic behavior, subject pool effects, incentive effects, context effects, methodology. Abstract: Students and managers in China are used as subjects in strategic incentive games with asymmetric information, under varying incentive and context conditions. Play converges only incompletely to a pooling equilibrium, although large increases in financial incentives produce more strategic play. Email Contact: djc13@guinness.som.cwru.edu

Eckel, Catherine C. (1999) “Comment on `The Effects of Financial Incentives in Experiments: A Review and Capital-Labor Production Framework' by Camerer and Hogarth,” Journal of Risk and Uncertainty, 19:1-3 47-48. Keywords: experiments, methodology, incentive effects. Email Contact: eckelc@vt.edu

Fiorina, Morris P., and Charles R. Plott (1978) “Committee Decisions under Majority Rule: An Experimental Study,” American Political Science Review, 72:2 (June), 575-598. Keywords: experiments, public, voting, committee decisions, Condorcet winner, core, incentive effects, non-monetary incentives. Abstract: Convergence to the core was observed with monetary incentives and not without. Email Contact: m_fiorina@harvard.edu**

Frank, Björn (1998) “Good News for Experimenters: Subjects Do Not Care about Your Welfare,” Economics Letters, 61:2 (November), 171-174. Keywords: experiments, methodology, incentives. Abstract: The two ultimatum game treatments differ in terms of whether or not the pie being divided (a set of stamps) is destroyed in the event of rejection. Rejection rates are no higher when the pie reverts to the experimenter in the event of rejection, which indicates that subjects do not care about the experimenter's welfare in this context. Email Contact: frank520f@aol.com

Gneezy, Uri, and Aldo Rustichini (1999) “Pay Enough or Don't Pay at All,” CentER Discussion Paper. Keywords: experiments, methodology, incentives. Email Contact: gneezy@econ.haifa.ac.il

Harrison, Glenn W. (1989) “Theory and Misbehavior of First-Price Auctions,” American Economic Review, 79:4 (September), 749-762. Keywords: experiments, auctions, methodology, incentive effects, decision costs, bounded rationality, payoff dominance, incentives. Email Contact: harrison@darla.badm.sc.edu

Harrison, Glenn W. (1990) “The Payoff Dominance Critique of Experimental Economics,” University of South Carolina, Department of Economics, Discussion Paper. Keywords: experiments, methodology, incentives, payoff dominance. Email Contact: harrison@darla.badm.sc.edu

Hoffman, Elizabeth, Kevin A. McCabe, and Vernon L. Smith (1996) “On Expectations and the Monetary Stakes in Ultimatum Games,” International Journal of Game Theory, 25:3 289-301*. Keywords: experiments, bargaining, incentive effects, ultimatum game. Email Contact: ehoffman@uic.edu

Holt, Charles A. (1995) “Psychology and Economics: A Discussion of Methodology,” University of Virginia, Discussion Paper, presented at the 1995 ASSA Meetings in Washington D.C. Keywords: experiments, methodology, incentives, probability matching, psychology, deception. Abstract: This paper discusses methodological differences between the experimental economics and psychology. Email Contact: holt@virginia.edu

List, John A., and Todd L. Cherry (1999) “Learning to Accept in Ultimatum Games: Evidence from an Experimental Design that Generates Low Offers,” University of Central Florida, Discussion Paper. Keywords: experiments, bargaining, ultimatum, logit, incentive effects, methodology. Abstract: On the basis of performance on a quiz, proposers are given either a high ($400) or low ($20) amount to divide in an ultimatum game. There are ten rounds of play with random matching, and one round is chosen ex post for payoffs. Responders "learn" to accept low percentage offers in later periods of the high stakes treatment, but not in the low stakes treatment. The design innovation is that the entitlement effect of the quiz produces relatively low offers, and the higher frequency of rejections allows more data that can be used to analyze rejection behavior. Email Contact: John.List@bus.ucf.edu

Loomes, Graham (1998) “Probabilities vs. Money: A test of Some Fundamental Assumptions about Rational Decision Making.,” Economic Journal, 108:447 (March), 477-489. Keywords: experiments, methodology, incentives. Email Contact: gcl1@york.ac.uk

McClintock, C. G., and S. P. McNeel (1966) “Reward Level and Game Playing Behavior,” Journal of Conflict Resolution, 1098-102. Keywords: experiments, methodology, incentive effects, game theory.

Slonim, Robert, and Alvin E. Roth (1998) “Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic,” Econometrica, 66:3 (May), 569-596. Keywords: experiments, methodology, financial incentives, bargaining, learning. Email Contact: rls18@guinness.som.cwru.edu

Smith, Vernon L. (1976) “Experimental Economics: Induced Value Theory,” American Economic Review, 66:2 (May), 274-279. Keywords: experiments, methodology, induced value theory, dominance, incentives, privacy. Abstract: This is a brief statement about the essential aspects of a good economics experiment. Email Contact: vls@econlab.arizona.edu

Smith, Vernon L., and James M. Walker (1993) “Monetary Rewards and Decision Cost in Experimental Economics,” Economic Inquiry, 31:2 (April), 245-261. Keywords: experiments, methodology, incentives, noisy behavior. Email Contact: vls@econlab.arizona.edu

Smith, Vernon L., and James W. Walker (1997) “Monetary Rewards and Decision Cost in Experimental Economics: An Extension,” University of Arizona, Discussion Paper. Keywords: experiments, methodology, bounded rationality, decision costs, decisions, game theory, incentives. Email Contact: vls@econlab.arizona.edu

Tarr, D. G. (1976) “Experiments in Token Economies: A Review of the Evidence Relating to Assumptions and Implications of Economic Theory,” Southern Economic Journal, 43:2 (October), 1136-1143. Keywords: experiments, methodology, survey, psychology, hypothetical incentives.