HIGH REWARD EXPERIMENTS WITHOUT HIGH EXPENDITURE FOR THE EXPERIMENTER

The relevance of economic experiments is often doubted because the incentives are far smaller than in real situations. In this article it is suggested to give all the money which a researcher has to his disposal to one randomly selected subject (or at most a few subjects). It is investigated theoretically and experimentally whether or not such a randomized reward is equivalent to a reward given to all subjects. In the theoretical investigation conditions are derived under which the reward structures are equivalent. In an experiment in which these conditions were fulfilled the (cheap) randomized reward structure and the (expensive) deterministic reward structure did not make the subjects behave differently. © 1990.