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On the provision of incentives in finance experiments

Published online by Cambridge University Press:  14 March 2025

Daniel Kleinlercher  and
Thomas Stöckl
Daniel Kleinlercher
Affiliation:
Department of Banking and Finance, Innsbruck University, Universitätsstrasse 15, 6020 Innsbruck, Austria
Thomas Stöckl*
Affiliation:
MCI - Management Center Innsbruck, Department Business Administration Online, Universitätsstrasse 15, 6020 Innsbruck, Austria
*
thomas.stoeckl@mci.edu
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Abstract

Monetary incentives are a procedural pillar in experimental economics. By applying four distinct monetary incentive schemes in three experimental finance applications, we investigate the impact of an incentive scheme’s salience on results and elicit subjects’ perception of the experienced scheme. We find (1) no differences in results between salient schemes but a significant impact if the incentive scheme is non-salient. (2) The number of previous participations has a significant impact on the perception of the incentive scheme by subjects: it strongly correlates with subjects’ motives for participation, positively contributes to subjects’ understanding of the incentive scheme, but has no influence on subjects’ motivation within the experiment. (3) Subjects favor more salient over less- or non-salient schemes in the gain domain and negatively evaluate high salience in the loss domain.

Keywords

Experimental financeIncentivesSalienceAsset marketMispricingInformation aggregationInvestment decision

JEL classification

G12: Asset Pricing • Trading Volume • Bond Interest Rates G14: Information and Market Efficiency • Event Studies • Insider Trading C92: Laboratory, Group Behavior D82: Asymmetric and Private Information • Mechanism Design
Type
Original Paper
Information
Experimental Economics , Volume 21 , Issue 1 , March 2018 , pp. 154 - 179
Copyright
Copyright © 2017 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-017-9530-7) contains supplementary material, which is available to authorized users.

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