Skip to Main Content

Working Papers

July 2021, No. 21-12R

Is Money Essential? An Experimental Approach (Revised July 2022)

Janet Hua Jiang, Peter Norman, Daniela Puzzello, Bruno Sultanum and Randall Wright

Money is called essential when better outcomes are incentive feasible with money than without it. We study essentiality theoretically and experimentally, using finite-horizon monetary models that suit our purposes well in the lab. Following mechanism design, we also study the effects of strategy recommendations when they are incentive compatible and when they are not. Results show the use of money and welfare are significantly higher in treatments where it is essential, and recommendations help when incentive compatible but not much otherwise. Sometimes money gets used when it should not, and we investigate why using surveys plus measures.


Phone Icon Contact Us

Katrina Mullen (804) 697-8145