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Incentives and payment mechanisms in preference elicitation

Last registered on March 13, 2023
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Pre-Trial

Trial Information

General Information

Title
Incentives and payment mechanisms in preference elicitation
RCT ID
AEARCTR-0009687
Initial registration date
July 03, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 08, 2022, 9:22 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
March 13, 2023, 5:34 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
United States of America
Region

Primary Investigator

Name
Andreas Drichoutis
Affiliation
Agricultural University of Athens
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Other Primary Investigator(s)

PI Name
Marco Palma
PI Affiliation
Texas A&M University
Contact Investigator

Additional Trial Information

Status
On going
Start date
2022-06-28
End date
2023-05-20
Keywords
Behavior
Additional Keywords
payoff mechanisms, incentives, real, hypothetical, BDM mechanism, preferences for meat
JEL code(s)
C90
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Experiment 1: This study is composed of two parts.

In part 1 we study the effect of incentives and payment mechanisms in preference elicitation. We vary incentives at five levels (hypothetical vs. 0.2% chance of subject getting paid vs. 1% chance of subject getting paid vs. 50% chance of subject getting paid vs. 100% chance of subject getting paid) and payment mechanism at five levels (pay one randomly/POR vs. pay all correlated with one draw at the end for all decisions/PAC vs. PAC divided by number of decisions vs. pay all at the end with independent draws for each decision/PAI vs. PAI divided by number of decisions). Incentives and payment mechanisms are varied between subjects. We use an induced value BDM mechanism to elicit preferences that varies within subjects the Induced Value ($1 and $3) with which subjects are endowed and the support of the price distribution ($4, $5 and $6) from which random prices are drawn. Subjects receive a $2.5 show up fee plus their earnings from part 1.

In part 2 of this study we elicit preferences for a conventional and a Criollo steak. We endow subjects with the conventional steak and ask them to bid to exchange the conventional steak with a Criollo steak. We elicit preferences for the Criollo steak with the BDM mechanism and vary between subjects the support of the distribution from which random prices are drawn ($4 and $5). Subjects are assigned to one of the following treatments: a) hypothetical treatment b) real treatment c) a treatment where subjects are told they have a 10% chance of actually having their decision realized d) a treatment where subjects are told that 50 out of 500 subjects will have their decision realized e) a treatment where subjects are told they have a 1% chance of having their decision realized. For subjects that have their decisions realized, we will ship steaks to their address via 2-day ground coolers dry ice via UPS/Fedex. Only those subjects that have their decisions realized, are endowed with $5.

For a subsample of subjects (500), we also test whether submitting a bid with a slider or a box makes a difference. We added two tasks similar to Part 1. Subjects bid in an induced value BDM ($2) with a support that varies at two levels ($3, $4). One of the two tasks is randomly drawn for payment. Subjects are randomized either to a treatment with sliders or a treatment where they use a box to submit their bid.

Experiment 2: This study is a follow up to Experiment 1 where we elicit preferences in an induced value second price auction and follow a 2x2 design: (hypothetical incentives vs. 100% chance of subjects getting paid) x (PACn vs. POR payment mechanism). Subjects participate in four bidding rounds where they bid to sell a card that varies the induced value across rounds: $1, $1.7, $2.4 and $3.
External Link(s)

Registration Citation

Citation
Drichoutis, Andreas and Marco Palma. 2023. "Incentives and payment mechanisms in preference elicitation." AEA RCT Registry. March 13. https://doi.org/10.1257/rct.9687-4.1
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Experimental Details

Interventions

Intervention(s)
Experiment 1: This study is composed of two parts.

In part 1 subjects are randomized on a between-subjects basis in one of the treatments of a 3x5 design. We vary incentives at three levels (1% chance of subject getting paid vs. 50% chance of subject getting paid vs. 100% chance of subject getting paid) and payment mechanism at five levels (pay one randomly/POR vs. pay all correlated with one draw at the end for all decisions/PAC vs. PAC divided by number of decisions vs. pay all at the end with independent draws for each decision/PAI vs. PAI divided by number of decisions). We use an induced value BDM mechanism to elicit preferences that varies within subjects the Induced Value ($1 and $3) with which subjects are endowed and the support of the price distribution ($4, $5 and $6) from which random prices are drawn. Subjects receive a $2.5 show up fee plus their earnings from part 1.

In part 2 of this study we elicit preferences for a conventional and a Criollo steak. We endow subjects with 5$ and the conventional steak and ask them to bid to exchange the conventional steak with a Criollo steak. We elicit preferences for the Criollo steak with the BDM mechanism and vary between subjects the support of the distribution from which random prices are drawn ($4 and $5). Subjects are assigned to one of the following treatments: a) hypothetical treatment b) real treatment c) a treatment where subjects are told they have a 10% chance of actually having their decision realized d) a treatment where subjects are told that 50 out of 500 subjects will have their decision realized. For subjects that have their decisions realized, we will ship steaks to their address via 2-day ground coolers dry ice via UPS/Fedex. Only those subjects that have their decisions realized, are endowed with $5.

After data collection for the above design was completed, we added a treatment for Part 1 for incentives and subjects were given a 0.2% (1 in 500 chance) of having their decisions realized and payment mechanism was varied between subjects at five levels (pay one randomly/POR vs. pay all correlated with one draw at the end for all decisions/PAC vs. PAC divided by number of decisions vs. pay all at the end with independent draws for each decision/PAI vs. PAI divided by number of decisions).

We also added one treatment in Part 2 where subjects had a 1% chance of having their decisions being realized.

For this additional treatments, we added a Part 3 in order to test whether submitting a bid with a slider or a box makes a difference. To this regard, we added two tasks similar to Part 1. Subjects bid in an induced value BDM ($2) with a support that varies at two levels ($3, $4). One of the two tasks is randomly drawn for payment. Subjects are randomized either to a treatment with sliders or a treatment where they use a box to submit their bid.

After collecting data for these additional treatments we added a hypothetical treatment for Part 1.

Experiment 2: This study is a follow up to Experiment 1 where we elicit preferences in an induced value second price auction and follow a 2x2 design: (hypothetical incentives vs. 100% chance of subjects getting paid) x (PACn vs. POR payment mechanism). Subjects participate in four bidding rounds in groups of four subjects, where they bid to sell a card that varies the induced value across rounds: $1, $1.7, $2.4 and $3. In each round, subjects are induced with a different value so that aggregate valuation remains constant across rounds.
Intervention Start Date
2022-06-28
Intervention End Date
2023-05-20

Primary Outcomes

Primary Outcomes (end points)
Experiment 1:

For Part 1: bid deviations from induced values.

For Part 2: bid for exchanging conventional steak to Criollo steak.

For Part 3: bids and bid deviations from induced values.

Experiment 2: bid deviations from induced values.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Experiment 1: This study is composed of two parts.

In part 1 subjects are randomized on a between-subjects basis in one of the treatments of a 3x5 design. We vary incentives at three levels (1% of subjects gets paid vs. 50% of subjects vs. 100% of subjects) and payment mechanism at five levels (pay one randomly/POR vs. pay all correlated with one draw at the end for all decisions/PAC vs. PAC divided by number of decisions vs. pay all at the end with independent draws for each decision/PAI vs. PAI divided by number of decisions). We use an induced value BDM mechanism to elicit preferences that varies within subjects the Induced Value ($1 and $3) with which subjects are endowed and the support of the price distribution ($4, $5 and $6) from which random prices are drawn. Subjects receive a $2.5 show up fee plus their earnings from part 1.

In part 2 of this study we elicit preferences for a conventional and a Criollo steak. We endow subjects with 5$ and the conventional steak and ask them to bid to exchange the conventional steak with a Criollo steak. We elicit preferences for the Criollo steak with the BDM mechanism and vary between subjects the support of the distribution from which random prices are drawn ($4 and $5). Subjects are assigned to one of the following treatments: a) hypothetical treatment b) real treatment c) a treatment where subjects are told they have a 10% chance of actually having their decision realized d) a treatment where subjects are told that 50 out of 500 subjects will have their decision realized. For subjects that have their decisions realized, we will ship steaks to their address via 2-day ground coolers dry ice via UPS/Fedex. Only those subjects that have their decisions realized, are endowed with $5.

After data collection for the above design was completed, we added a treatment for Part 1 for incentives and subjects were given a 0.2% (1 in 500 chance) of having their decisions realized and payment mechanism was varied between subjects at five levels (pay one randomly/POR vs. pay all correlated with one draw at the end for all decisions/PAC vs. PAC divided by number of decisions vs. pay all at the end with independent draws for each decision/PAI vs. PAI divided by number of decisions).

We also added one treatment in Part 2 where subjects had a 1% chance of having their decisions being realized.

For this additional treatments, we added a Part 3 in order to test whether submitting a bid with a slider or a box makes a difference. To this regard, we added two tasks similar to Part 1. Subjects bid in an induced value BDM ($2) with a support that varies at two levels ($3, $4). One of the two tasks is randomly drawn for payment. Subjects are randomized either to a treatment with sliders or a treatment where they use a box to submit their bid.

After collecting data for these additional treatments we added a hypothetical treatment for Part 1.

Experiment 2: This study is a follow up to Experiment 1 where we elicit preferences in an induced value second price auction and follow a 2x2 design: (hypothetical incentives vs. 100% chance of subjects getting paid) x (PACn vs. POR payment mechanism). Subjects participate in four bidding rounds in groups of four subjects, where they bid to sell a card that varies the induced value across rounds: $1, $1.7, $2.4 and $3. In each round, subjects are induced with a different value so that aggregate valuation remains constant across rounds.
Experimental Design Details
Randomization Method
The study is administered in Qualtrics so every randomization is handled with the Qualtrics platform.
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Experiment 1: 1500 subjects + 500 subjects for the additional treatments after collecting data for the 1500 subjects + 500 subjects for the hypothetical treatment

Experiment 2: at least 400 subjects in total (100 subjects/treatment)
Sample size: planned number of observations
Experiment 1: Part 1: we will recruit 1500 subjects that will be evenly spread along the 15 cells of our experimental design (100 subjects per treatment). Each subject will make 6 decisions. The additional 1000 subjects (for the hypothetical and the 0.2% chance treatment) are split between 5 cells of our experimental design that varies the payment mechanism. Part 2: Subjects from Part 1, will make an additional decision by bidding for having a conventional steak exchanged to a Criollo steak. Part 3: The additional 500 subjects. Experiment 2: at least 400 subjects in total (100 subjects/treatment)
Sample size (or number of clusters) by treatment arms
Experiment 1:
Part 1: 100 subjects per treatment cell; 6 decisions per subject.

Part 2: a) hypothetical treatment: 400 subjects b) real treatment: 100 subjects c) the 10% treatment: 500 subjects d) the 50 out of 500 treatment: 500 subjects e) the 1% treatment: 500 subjects

Part 3: 500 subjects

Experiment 2: at least 100 subjects per treatment cell; 4 decisions per subject.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Experiment 1: The per treatment sample size was selected for Part 1 of the study and sample size for Part 2 was dictated by what was decided for Part 1. Our target of 100 subjects/treatment is large enough to detect minimum differences in bid deviations of 0.05 or larger with 80% power, based on a standard deviation of 0.16 for the absolute deviation of bids from the induced value in a BDM mechanism as calculated from data in Chakraborty and Kendall (2022; Future self-proof elicitation mechanisms; working paper) which recruited subjects over Prolific. Experiment 2: We kept the same sample size per treatment as in Experiment 1.
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Texas A&M University
IRB Approval Date
2022-06-27
IRB Approval Number
IRB2022-0477D/143971
IRB Name
Texas A&M University
IRB Approval Date
2023-03-13
IRB Approval Number
IRB2022-0477D/155440
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials