The Ethics of Incentivizing the Uninformed. A Vignette Study

5 Pages Posted: 22 Dec 2016 Last revised: 16 Apr 2017

See all articles by Sandro Ambuehl

Sandro Ambuehl

University of Zurich - Department of Economics

Axel Ockenfels

University of Cologne - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 21, 2016

Abstract

Our recent working paper (Ambuehl, Ockenfels, and Stewart, 2017) shows theoretically and experimentally that people with higher costs of information processing respond more to an increase in the incentive for a complex transaction, and decide to participate based on a worse understanding of its consequences. Here, we address the resulting tradeoff between the principle of informed consent and the principle of free contract. Respondents to our vignette study on oocyte donation overwhelmingly favor the former, and support policies that require donors to thoroughly understand the transaction. This finding helps design markets that are not only efficient, but also considered ethical.

JEL Classification: D04, D47, D63, D83

Suggested Citation

Ambuehl, Sandro and Ockenfels, Axel, The Ethics of Incentivizing the Uninformed. A Vignette Study (December 21, 2016). Rotman School of Management Working Paper No. 2888554. Available at SSRN: https://ssrn.com/abstract=2888554 or http://dx.doi.org/10.2139/ssrn.2888554

Sandro Ambuehl (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

HOME PAGE: http://https://sites.google.com/site/sandroambuehl/home

Axel Ockenfels

University of Cologne - Department of Economics ( email )

Albertus Magnus Platz
Cologne 50923
Germany

HOME PAGE: http://ockenfels.uni-koeln.de/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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