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My money or yours: house money payment effects

Published online by Cambridge University Press:  14 March 2025

Larry R. Davis*
Affiliation:
School of Business and Economics, Michigan Technological University, Houghton, MI 49931, USA
B. Patrick Joyce*
Affiliation:
School of Business and Economics, Michigan Technological University, Houghton, MI 49931, USA
Matthew R. Roelofs*
Affiliation:
Department of Economics, College of Business and Economics, Western Washington University, Bellingham, WA 98225, USA

Abstract

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.

Type
Research Article
Copyright
Copyright © Economic Science Association 2010

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Footnotes

Electronic supplementary material The online version of this article (doi: 10.1007/s10683-010-9235-7) contains supplementary material, which is available to authorized users.

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