An experimental test of whether financial incentives constitute undue inducement in decision-making

Sandro Ambuehl ()
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Sandro Ambuehl: University of Zurich
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Nature Human Behaviour, 2024, vol. 8, issue 5, 835-845

Abstract: Abstract Around the world, laws limit the incentives that can be paid for transactions such as human research participation, egg donation or gestational surrogacy. A key reason is concerns about ‘undue inducement’—the influential but empirically untested hypothesis that incentives can cause harm by distorting individual decision-making. Here I present two experiments (n = 671 and n = 406), including one based on a highly visceral transaction (eating insects). Incentives caused biased information search—participants offered a higher incentive to comply more often sought encouragement to do so. However, I demonstrate theoretically that such behaviour does not prove that incentives have harmful effects; it is consistent with Bayesian rationality. Empirically, although a substantial minority of participants made bad decisions, incentives did not magnify them in a way that would suggest allowing a transaction but capping incentives. Under the conditions of this experiment, there was no evidence that higher incentives could undermine welfare for transactions that are permissible at low incentives.

Date: 2024
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DOI: 10.1038/s41562-024-01817-8

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