Abstract
AbstractAround the world, laws limit the incentives that can be paid for transactions such as human research participation, egg donation or gestational surrogacy. A key reason is concerns about ‘undue inducement’—the influential but empirically untested hypothesis that incentives can cause harm by distorting individual decision-making. Here I present two experiments (n = 671 and n = 406), including one based on a highly visceral transaction (eating insects). Incentives caused biased information search—participants offered a higher incentive to comply more often sought encouragement to do so. However, I demonstrate theoretically that such behaviour does not prove that incentives have harmful effects; it is consistent with Bayesian rationality. Empirically, although a substantial minority of participants made bad decisions, incentives did not magnify them in a way that would suggest allowing a transaction but capping incentives. Under the conditions of this experiment, there was no evidence that higher incentives could undermine welfare for transactions that are permissible at low incentives.
Funder
Department of Economics, Stanford University Department of Economics, University of Zurich
Publisher
Springer Science and Business Media LLC
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1. Testing undue incentives;Nature Human Behaviour;2024-03-08