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Pay all subjects or pay only some? An experiment on decision-making under risk and ambiguity

Author

Listed:
  • Ilke Aydogan

    (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie´ Management, F-59000 Lille, France; and iRisk Research Center on Risk and Uncertainty)

  • Loïc Berger

    (CNRS, Univ. Lille, IESEG School of Management, UMR 9221 - LEM - Lille Economie´ Management, F-59000 Lille,France; iRisk Research Center on Risk and Uncertainty; RFF-CMCC European Institute on Economics and the Environment (EIEE), and Centro Euro-Mediterraneo sui Cambiamenti Climatici, Italy)

  • Vincent Theroude

    (Université de Lorraine, Université de Strasbourg, CNRS, BETA, 54000, Nancy, France)

Abstract

We investigate the validity of a double random incentive system where only a subset of subjects is paid for one of their choices. By focusing on individual decisionmaking under risk and ambiguity, we show that using either a standard random incentive system, where all subjects are paid, or a double random system, where only 10% of subjects are paid, yields similar preference elicitation results. These findings suggest that adopting a double random incentive system could significantly reduce experimental costs and logistic e orts, thereby facilitating the exploration of individual decision-making in larger-scale and higher-stakes experiments.

Suggested Citation

  • Ilke Aydogan & Loïc Berger & Vincent Theroude, 2024. "Pay all subjects or pay only some? An experiment on decision-making under risk and ambiguity," Working Papers 2024-iRisk-03, IESEG School of Management.
    • Handle: RePEc:ies:wpaper:e202415
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    References listed on IDEAS

    as
    1. Mehdi Toloo & Reza Farzipoor Saen & Majid Azadi, 2015. "Obviating some of the theoretical barriers of data envelopment analysis-discriminant analysis: an application in predicting cluster membership of customers," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(4), pages 674-683, April.
    2. Farbmacher, Helmut & Löw, Leander & Spindler, Martin, 2022. "An explainable attention network for fraud detection in claims management," Journal of Econometrics, Elsevier, vol. 228(2), pages 244-258.
    3. Pendharkar, Parag C., 2002. "A potential use of data envelopment analysis for the inverse classification problem," Omega, Elsevier, vol. 30(3), pages 243-248, June.
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    Keywords

    Experimental methodology; Payment methods; Incentives; Ambiguity elicitation;
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