Incentives or Persuasion? An Experimental Investigation

Andreas Aristidou, Giorgio Coricelli, Alexander Vostroknutov

Research output: Working paperProfessional

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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.
Original languageEnglish
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages45
DOIs
Publication statusPublished - 16 Apr 2019

Publication series

SeriesGSBE Research Memoranda
Number012

JEL classifications

  • c91 - Design of Experiments: Laboratory, Individual
  • c92 - Design of Experiments: Laboratory, Group Behavior
  • d47 - Market Design
  • d91 - "Intertemporal Consumer Choice; Life Cycle Models and Saving"

Keywords

  • persuasion
  • mechanism design
  • information design
  • experiments

Cite this

Aristidou, A., Coricelli, G., & Vostroknutov, A. (2019). Incentives or Persuasion? An Experimental Investigation. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 012 https://doi.org/10.26481/umagsb.2019012