My money or yours: House money payment effects
Document Type
Article
Publication Date
6-2010
Department
College of Business
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.
Publication Title
Experimental Economics
Recommended Citation
Davis, L. R.,
Joyce, B. P.,
&
Roelofs, M.
(2010).
My money or yours: House money payment effects.
Experimental Economics,
13(2), 189-205.
http://doi.org/10.1007/s10683-010-9235-7
Retrieved from: https://digitalcommons.mtu.edu/michigantech-p/4893