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Incentives or Persuasion? An Experimental Investigation

Andreas Aristidou, Giorgio Coricelli and Alexander Vostroknutov
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Alexander Vostroknutov: RS: GSBE other - not theme-related research, Microeconomics & Public Economics

No 12, Research Memorandum from Maastricht University, Graduate School of Business and Economics (GSBE)

Abstract: There are two theoretically parallel ways in which principals can manipulate agents’ choices: with monetary incentives (mechanism design) or Bayesian persuasion (information design). We are interested in whether incentives or persuasion is a better strategy for principals. We conduct an experiment that investigates the behavioral side of the theoretical parallelism between these approaches. We find that principals are more successful when persuading than when incentivizing. Agents appear to be more demanding in mechanism design than in information design. Our analysis also identifies many features that make mechanism and information design behaviorally distinct in practice.

JEL-codes: C91 C92 D47 D91 (search for similar items in EconPapers)
Date: 2019-04-16
New Economics Papers: this item is included in nep-cbe and nep-exp
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Citations: View citations in EconPapers (4)

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DOI: 10.26481/umagsb.2019012

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