ICES Brown Bag for January 23

Events, Seminars | January 13, 2020

Join us for the ICES Brown Bag Lecture of the Spring 2020 semester, featuring Patrick McAlvanah´╗┐.

Dr. McAlvanah, of the Federal Trade Commission, will discuss his paper Pay Every Subject or Pay Only Some? (Abstract). The talk will take place on Thursday, January 23rd, from 12:00 to 1:00pm, in room 5075 of the Vernon Smith Hall, Arlington campus.

Coffee and dessert will be provided.

Please visit the Brown Bag Schedule to learn more about the Brown Bag series.

Abstract

One technique employed by budget-conscious researchers is to pay only some subjects for their choices in an experiment. We test the effect of paying some subjects versus paying all subjects in the context of risk preferences, controlling for the difference in stakes induced by paying only some subjects. Over two experiments, we demonstrate that paying some subjects yields lower levels of risk aversion than paying all subjects, but more risk aversion than paying all subjects lower stakes. Paying some subjects also impacts the ordering of subjects by elicited risk aversion. Neither probability weighting nor standard experimental demographics were correlated with subjects’ differences between these conditions. We exploit our multiple measurements of risk aversion to estimate a simple structural model of latent risk aversion and derive a correction factor to approximate the results as if all subjects were paid high stakes. Our findings imply that paying some subjects high stakes meaningfully impacts the elicited level of risk aversion, although it better approximates the experimental ideal of paying all subjects high stakes compared to paying all subjects lower stakes.

<<< Back to News Page