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On the role of monetary incentives in risk preference elicitation experiments

Author

Listed:
  • Andreas Hackethal

    (Goethe University Frankfurt and Leibniz Institute for Financial Research SAFE)

  • Michael Kirchler

    (University of Innsbruck)

  • Christine Laudenbach

    (University of Bonn)

  • Michael Razen

    (University of Innsbruck)

  • Annika Weber

    (Goethe University Frankfurt and Leibniz Institute for Financial Research SAFE)

Abstract

Incentivized experiments in which individuals receive monetary rewards according to the outcomes of their decisions are regarded as the gold standard for preference elicitation in experimental economics. These task-related real payments are considered necessary to reveal subjects’ “true preferences.” Using a systematic, large-sample approach with three subject pools of private investors, professional investors, and students, we test the effect of task-related monetary incentives on risk preferences in four standard experimental tasks. We find no significant differences in behavior between and within subjects in the incentivized and non-incentivized regimes. We discuss implications for academic research and forions in the field.

Suggested Citation

  • Andreas Hackethal & Michael Kirchler & Christine Laudenbach & Michael Razen & Annika Weber, 2023. "On the role of monetary incentives in risk preference elicitation experiments," Journal of Risk and Uncertainty, Springer, vol. 66(2), pages 189-213, April.
    • Handle: RePEc:kap:jrisku:v:66:y:2023:i:2:d:10.1007_s11166-022-09377-w
    DOI: 10.1007/s11166-022-09377-w
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    2. Truc Thanh Tran & Nam Khanh Pham, 2024. "Risk Preferences and Entrepreneurial Decision-Making: Evidence from Experimental Methods in Vietnam," Sustainability, MDPI, vol. 16(11), pages 1-16, May.

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