Wednesday, August 28, 2013

Are there biases from monetary rewards in experimental economics?

It has become very fashionable to run economic experiments in the laboratory. Typically, undergraduate students are lured into the lab with some monetary rewards. A longstanding question has been whether this leads to a selection bias that renders the experiment results impossible to generalize. One paper I previously discussed (here) finds no bias within students, a second (here) worries that students in developed economies are not representative at all.

Johannes Abeler and Daniele Nosenzo add another bit of evidence. They invited students to an experiment, either by offering money or not, and either by appealing to the usefulness of research or not. First, the authors observe that appealing to money is much more successful than appealing to research, it triples the number of respondents. Thus, given that participants care more about money, we may think that they would have different characteristics compared to the others. That turns out not to be the case. Thus, no bias from monetary rewards, at least within the student population.

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