Monetary payoffs and utility in laboratory experiments

    Research output: Contribution to journalArticle

    1 Citation (Scopus)

    Abstract

    Experimental research in economics relies on performance-dependent monetary incentives to implement theoretical games in the laboratory. While the set of players and the set of strategies of those games are unambiguously defined and controlled by the experimenter, utility is typically either assumed to coincide with monetary payoffs or is estimated ex post based on observed actions. We follow a different path and discuss results from an experiment on simple 2-person games in which participants were repeatedly asked to report their expectations on the opponent's behavior and their own level of satisfaction for each possible outcome of the game. This approach allows us to reflect on experimental methodology by directly comparing monetary incentives with (perceived and declared) utility. We find that, albeit helpful, repetition and experience are unable to completely align utility with monetary incentives. While most participants (57%) seek to maximize money earnings in the experimental laboratory and tend to perceive the games in the intended way, a small – yet non-negligible – fraction (27%) of the subject pool consistently interprets the game and, therefore, acts in an unexpected way.

    Original languageEnglish
    Pages (from-to)108-121
    Number of pages14
    JournalJournal of Economic Psychology
    Volume65
    DOIs
    Publication statusPublished - 2018 Apr 1

    Fingerprint

    laboratory experiment
    Motivation
    incentive
    money
    Economics
    human being
    experiment
    methodology
    Research
    performance
    economics
    Laboratory experiments
    experience
    Monetary incentives

    Keywords

    • Experimental method
    • Incentives
    • Induced-value method
    • Prisoners’ dilemma
    • Utility

    ASJC Scopus subject areas

    • Sociology and Political Science
    • Applied Psychology
    • Economics and Econometrics

    Cite this

    Monetary payoffs and utility in laboratory experiments. / Veszteg, Robert Ferenc; Funaki, Yukihiko.

    In: Journal of Economic Psychology, Vol. 65, 01.04.2018, p. 108-121.

    Research output: Contribution to journalArticle

    @article{a39cc71818fa483aaf416d00ce9bf2fb,
    title = "Monetary payoffs and utility in laboratory experiments",
    abstract = "Experimental research in economics relies on performance-dependent monetary incentives to implement theoretical games in the laboratory. While the set of players and the set of strategies of those games are unambiguously defined and controlled by the experimenter, utility is typically either assumed to coincide with monetary payoffs or is estimated ex post based on observed actions. We follow a different path and discuss results from an experiment on simple 2-person games in which participants were repeatedly asked to report their expectations on the opponent's behavior and their own level of satisfaction for each possible outcome of the game. This approach allows us to reflect on experimental methodology by directly comparing monetary incentives with (perceived and declared) utility. We find that, albeit helpful, repetition and experience are unable to completely align utility with monetary incentives. While most participants (57{\%}) seek to maximize money earnings in the experimental laboratory and tend to perceive the games in the intended way, a small – yet non-negligible – fraction (27{\%}) of the subject pool consistently interprets the game and, therefore, acts in an unexpected way.",
    keywords = "Experimental method, Incentives, Induced-value method, Prisoners’ dilemma, Utility",
    author = "Veszteg, {Robert Ferenc} and Yukihiko Funaki",
    year = "2018",
    month = "4",
    day = "1",
    doi = "10.1016/j.joep.2018.02.001",
    language = "English",
    volume = "65",
    pages = "108--121",
    journal = "Journal of Economic Psychology",
    issn = "0167-4870",
    publisher = "Elsevier",

    }

    TY - JOUR

    T1 - Monetary payoffs and utility in laboratory experiments

    AU - Veszteg, Robert Ferenc

    AU - Funaki, Yukihiko

    PY - 2018/4/1

    Y1 - 2018/4/1

    N2 - Experimental research in economics relies on performance-dependent monetary incentives to implement theoretical games in the laboratory. While the set of players and the set of strategies of those games are unambiguously defined and controlled by the experimenter, utility is typically either assumed to coincide with monetary payoffs or is estimated ex post based on observed actions. We follow a different path and discuss results from an experiment on simple 2-person games in which participants were repeatedly asked to report their expectations on the opponent's behavior and their own level of satisfaction for each possible outcome of the game. This approach allows us to reflect on experimental methodology by directly comparing monetary incentives with (perceived and declared) utility. We find that, albeit helpful, repetition and experience are unable to completely align utility with monetary incentives. While most participants (57%) seek to maximize money earnings in the experimental laboratory and tend to perceive the games in the intended way, a small – yet non-negligible – fraction (27%) of the subject pool consistently interprets the game and, therefore, acts in an unexpected way.

    AB - Experimental research in economics relies on performance-dependent monetary incentives to implement theoretical games in the laboratory. While the set of players and the set of strategies of those games are unambiguously defined and controlled by the experimenter, utility is typically either assumed to coincide with monetary payoffs or is estimated ex post based on observed actions. We follow a different path and discuss results from an experiment on simple 2-person games in which participants were repeatedly asked to report their expectations on the opponent's behavior and their own level of satisfaction for each possible outcome of the game. This approach allows us to reflect on experimental methodology by directly comparing monetary incentives with (perceived and declared) utility. We find that, albeit helpful, repetition and experience are unable to completely align utility with monetary incentives. While most participants (57%) seek to maximize money earnings in the experimental laboratory and tend to perceive the games in the intended way, a small – yet non-negligible – fraction (27%) of the subject pool consistently interprets the game and, therefore, acts in an unexpected way.

    KW - Experimental method

    KW - Incentives

    KW - Induced-value method

    KW - Prisoners’ dilemma

    KW - Utility

    UR - http://www.scopus.com/inward/record.url?scp=85044586762&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=85044586762&partnerID=8YFLogxK

    U2 - 10.1016/j.joep.2018.02.001

    DO - 10.1016/j.joep.2018.02.001

    M3 - Article

    VL - 65

    SP - 108

    EP - 121

    JO - Journal of Economic Psychology

    JF - Journal of Economic Psychology

    SN - 0167-4870

    ER -