| Summary: | This paper reports on three laboratory experiments designed to investigate the roles of decision costs and rewards on the accuracy of economic decisions. The experimental vehicle is a purchase decision employing the Becker-DeGroot-Marshak (BDM) mechanism. The first experiment verifies the incentive-compatibility of the BDM in a pure induced-value setting; the third addresses the role of feedback information. Steep payoff schedules are found to be necessary to optimizing behavior only in cases where subjects must search out an optimal strategy rather than being able to deduce it from information provided. Reprinted by permission of Western Economic International 7400 Center Ave., Ste. 109, Huntington Beach, CA 92647-3039, USA ph. 1-714-898-3222, Fax 1-714-891-6715 E-mail info@weainternational.org http://www.weainternational.org.
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