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Experimental Economics

, Volume 15, Issue 1, pp 145–157 | Cite as

Whose money is it anyway? Using prepaid incentives in experimental economics to create a natural environment

  • Mosi Rosenboim
  • Tal ShavitEmail author
Article

Abstract

Simulating a real world environment is of utmost importance for achieving accurate and meaningful results in experimental economics. Offering monetary incentives is a common method of creating this environment. In general, experimenters provide the rewards at the time of experiment. In this paper, we argue that receiving the reward at the time of the experiment may lead participants to make decisions as if the money they are using were not their own. To solve this problem, we devised a “prepaid mechanism” that encourages participants to use the money as if it were their own.

Keywords

Second-price auction Loss aversion Trust game Monetary incentive Experiment Financial decision making Reward 

JEL Classification

C91 D03 

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Copyright information

© Economic Science Association 2011

Authors and Affiliations

  1. 1.Department of Management, Guilford Glazer Faculty of Business and ManagementBen-Gurion University of the NegevBe’er ShevaIsrael
  2. 2.Department of Applied EconomicsSapir Academic CollegeSderotIsrael
  3. 3.School of Business AdministrationCollege of Management Academic StudiesRishon LezionIsrael

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