Monday, June 8, 2015

More Money, More Problems? Can High Pay Be Coercive and Repugnant?

One of the places where medical ethicists' intuitions are most different from those of economists is whether certain monetary transactions can become repugnant when the amount of money involved becomes high enough to be "coercive." Here's a brief paper that tries to bridge that gap.

Ambuehl, Sandro, Muriel Niederle, and Alvin E. Roth. 2015. "More Money, More Problems? Can High Pay Be Coercive and Repugnant?" American Economic Review, 105(5): 357-60.

IRBs can disallow high incentives they deem coercive. A vignette study on MTurk concerning participation in medical trials shows that a substantial minority of subjects concurs. They think high incentives cause more regret, and that more people would be better off without the opportunity to participate. We model observers as judging the ethicality of incentives by partially using their own utility. The model predicts that payments are repugnant only to the extent that they affect the participation decision, and more so for larger transactions. Incentivizing poorer participants is more repugnant, and in-kind incentives are less repugnant than monetary incentives.

Sandro Ambuehl is at the forefront of exploring the nexus of high pay, repugnance and coercion. He'll be on the market next year...and is definitely worth keeping an eye on.

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