Does high pay equal "undue inducement"? An experiment by Sandro Ambuehl

 Here's an experiment about repugnant transactions, by Sandro Ambuehl.

Ambuehl, Sandro, "An experimental test of whether financial incentives constitute undue inducement in decision-making." Nature Human Behavior (2024). https://doi.org/10.1038/s41562-024-01817-8

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.

From the conclusions:

"Given the potentially high costs of preventing voluntary transactions, experiments paralleling those reported here should be conducted in the field. Unless their results differ drastically from the current ones, the rules and guidelines restricting incentives due to undue inducement concerns should be reconsidered."