Incentivized experiments in which individuals receive monetary rewards according to the outcomes of their decisions are regarded as the gold standard for preference elicitation in experimental economics. These task-related real payments are considered necessary to reveal subjects’ “true preferences”. Using a systematic, large-sample approach with three subject pools of private investors, professional investors, and students, we test the effect of task-related monetary incentives on risk preferences in four standard experimental tasks. We find no systematic differences in behavior between and within subjects in the incentivized and non-incentivized regimes. We discuss implications for academic research and for applications in the field.
SAFE Working Paper No. 286