Title
My Money or Yours: House Money Payment Effects
Department/School
Accounting
Date of this version
6-2010
Document Type
Article
Keywords
payment timing, information, decision uncertainty, show-up fee, participation payment
DOI
https://doi.org/10.1007/s10683-010-9235-7
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.
Volume
13
Published in
Journal of Experimental Economics
Citation/Other Information
Davis, L. R., Joyce, B. P., & Roelofs, M. R. (2010). My money or yours: house money payment effects. Journal of Experimental Economics, 13, 189-205. https://doi.org/10.1007/s10683-010-9235-7