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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Can incentives cause harm? Tests of undue inducement |
| Organization Unit | |
| Authors |
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| Language |
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| Series Name | SSRN |
| Number | 2830171 |
| ISSN | 1556-5068 |
| Number of Pages | 51 |
| Date | 2021 |
| Abstract Text | Around the world, laws limit incentives for transactions such as human research participation, egg donation, or gestational surrogacy. A key reason is the notion of undue inducement - the conceptually vague and empirically largely untested idea that incentives cause harm by distorting individual decision making. Two experiments, including one based on a highly visceral transaction, show that incentives bias information search. Yet, such behavior is also consistent with Bayes-rational behavior. I develop a criterion that indicates whether choices admit welfare weights on benefit and harm that justify permitting the transaction but capping incentives. In my experimental data, no such weights exist. |
| Free access at | Official URL |
| Official URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2830171 |
| Digital Object Identifier | 10.2139/ssrn.2830171 |
| Other Identification Number | merlin-id:22089 |
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| Keywords | Incentives, repugnant transactions, information acquisition, rational inattention, experiment, individual choice |