Payoff effects in information cascade experiments

Error rates are estimated using data from " information cascade " experiments. The econometric estimation assumes a logistic error structure and error rates are compared across three experimental treatments that differ only with respect to payoff structure. In a " no payoff " treatment subjects receive a fixed payment for participating in the experiment and earnings do not vary with decisions. In " payoff " and " double payoff " treatments earnings depend on each subject's decisions. The results indicate that rewarding correct decisions reduces the amount of decision error However, increasing the payment for a correct decision does not reduce errors over the range of payoffs considered.