Header

UZH-Logo

Maintenance Infos

An experimental test of whether financial incentives constitute undue inducement in decision-making


Ambuehl, Sandro (2024). An experimental test of whether financial incentives constitute undue inducement in decision-making. Nature Human Behaviour, 8(5):835-845.

Abstract

Around the world, laws limit the incentives that can be paid for transactions such as human research participation, egg donation or gestational surrogacy. A key reason is concerns about ‘undue inducement’ - the influential but empirically untested hypothesis that incentives can cause harm by distorting individual decision-making. Here I present two experiments (n = 671 and n = 406), including one based on a highly visceral transaction (eating insects). Incentives caused biased information search - participants offered a higher incentive to comply more often sought encouragement to do so. However, I demonstrate theoretically that such behaviour does not prove that incentives have harmful effects; it is consistent with Bayesian rationality. Empirically, although a substantial minority of participants made bad decisions, incentives did not magnify them in a way that would suggest allowing a transaction but capping incentives. Under the conditions of this experiment, there was no evidence that higher incentives could undermine welfare for transactions that are permissible at low incentives.

Abstract

Around the world, laws limit the incentives that can be paid for transactions such as human research participation, egg donation or gestational surrogacy. A key reason is concerns about ‘undue inducement’ - the influential but empirically untested hypothesis that incentives can cause harm by distorting individual decision-making. Here I present two experiments (n = 671 and n = 406), including one based on a highly visceral transaction (eating insects). Incentives caused biased information search - participants offered a higher incentive to comply more often sought encouragement to do so. However, I demonstrate theoretically that such behaviour does not prove that incentives have harmful effects; it is consistent with Bayesian rationality. Empirically, although a substantial minority of participants made bad decisions, incentives did not magnify them in a way that would suggest allowing a transaction but capping incentives. Under the conditions of this experiment, there was no evidence that higher incentives could undermine welfare for transactions that are permissible at low incentives.

Statistics

Citations

Dimensions.ai Metrics
1 citation in Web of Science®
1 citation in Scopus®
Google Scholar™

Altmetrics

Downloads

0 downloads since deposited on 13 Jun 2024
0 downloads since 12 months

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
03 Faculty of Economics > UBS Center for Economics in Society
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Social Psychology
Social Sciences & Humanities > Experimental and Cognitive Psychology
Life Sciences > Behavioral Neuroscience
Scope:Discipline-based scholarship (basic research)
Language:English
Date:8 March 2024
Deposited On:13 Jun 2024 09:58
Last Modified:14 Jun 2024 20:01
Publisher:Nature Publishing Group
ISSN:2397-3374
OA Status:Hybrid
Publisher DOI:https://doi.org/10.1038/s41562-024-01817-8
Project Information:
  • : FunderDepartment of Economics, Stanford University Department of Economics, University of Zurich
  • : Grant ID
  • : Project Title
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)