My money or yours: house money payment effects
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This paper reports the results of an experiment designed to study how subjects’ decision making may be affected by the timing of participation payments (or show-up fees). The experiment follows Davis et al. (J. Econ. 30:69–95, 2004) where subjects were asked to make a sequential purchase decision and were given the opportunity to purchase information about the value of a good prior to a decision to purchase the good itself. There, subjects purchased information less often than expected which was interpreted as risk-seeking behavior. Here, we test a payment hypothesis by varying the timing of the participation payment. Payment of a show-up fee before the decision-making stages of the experiment increases information purchase, which we interpret as an increase in risk-averse behavior.
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- My money or yours: house money payment effects
Volume 13, Issue 2 , pp 189-205
- Cover Date
- Print ISSN
- Online ISSN
- Springer US
- Additional Links
- Payment timing
- Decision uncertainty
- Show-up fee
- Participation payment
- Industry Sectors
- Author Affiliations
- 1. School of Business and Economics, Michigan Technological University, Houghton, MI, 49931, USA
- 2. Department of Economics, College of Business and Economics, Western Washington University, Bellingham, WA, 98225, USA