Paid and hypothetical time preferences are the same: lab, field and online evidence

The use of real decision-making incentives remains under debate after decades of economic experiments. In time preferences experiments involving future payments, real incentives are particularly problematic due to between-options differences in transaction costs, among other issues. What if hypothet...

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Bibliographic Details
Published inExperimental economics : a journal of the Economic Science Association Vol. 26; no. 2; pp. 412 - 434
Main Authors Brañas-Garza, Pablo, Jorrat, Diego, Espín, Antonio M., Sánchez, Angel
Format Journal Article
LanguageEnglish
Published New York Springer US 01.04.2023
Springer Nature B.V
Subjects
Behavioral/Experimental Economics
Cost control
Decision making
Discount rates
Discounting
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Elicitation
Experiments
Game Theory
Incentives
Interest rates
Microeconomics
Monetary incentives
Operations Research/Decision Theory
Original Paper
Payments
Preferences
Social and Behav. Sciences
Transaction costs
Within-subjects design
Field
Hypothetical vs. real payoffs
BRIS
Online experiments
C91
Lab
C93
Time preferences
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Summary:The use of real decision-making incentives remains under debate after decades of economic experiments. In time preferences experiments involving future payments, real incentives are particularly problematic due to between-options differences in transaction costs, among other issues. What if hypothetical payments provide accurate data which, moreover, avoid transaction cost problems? In this paper, we test whether the use of hypothetical or one-out-of-ten-participants probabilistic—versus real—payments affects the elicitation of short-term and long-term discounting in a standard multiple price list task. We analyze data from a lab experiment in Spain and well-powered field and online experiments in Nigeria and the UK, respectively ( N  = 2,038). Our results indicate that the preferences elicited using the three payment methods are mostly the same : we can reject that either hypothetical or one-out-of-ten payments change any of the four preference measures considered by more than 0.18 SD with respect to real payments.
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ISSN:1386-4157
1573-6938
DOI:10.1007/s10683-022-09776-5