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Sequential Common Consequence Effect and Incentives

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  • Maria J. Ruiz Martos

    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

Economics calls for monetary incentives to induce participants to exhibit truthful behaviour. This experiment investigates the effect of reducing incentives on dynamic choices, which encompass the individual and chance in a sequence of decisions. This experiment compares choices with the commonly used random lottery incentive system (RLIS) to hypothetical choices in the dynamic choice setting surrounding the common consequence effect (CCE), both horizontal and vertical. In addition, the RLIS is partially controlled for by eliciting with single choice individual preferences over the two horizontal CCE static choice problems. Results suggest that lessening incentives do not induce a systematic shift in preferences when emotional responses are not at stake.

Suggested Citation

  • Maria J. Ruiz Martos, 2018. "Sequential Common Consequence Effect and Incentives," ThE Papers 18/04, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:18/04
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    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers18_04.pdf
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    More about this item

    Keywords

    experiments; monetary incentives; non-expected utility and risk; dynamic choice principles; common consequence effect;
    All these keywords.

    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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