American Economic Review Vol. 107 No. 5 2017

The Ethics of Incentivizing the Uninformed: A Vignette Study

Sandro Ambuehl¹; Axel Ockenfels²

¹ Department of Management, UTSC, and Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, ON M5S 3E6, Canada (e-mail: ) · ² Department of Economics, University of Cologne, Universitätsstrasse 22a, 50923 Cologne, Germany (e-mail: )

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.

DOI

10.1257/aer.p20171109

Volume

107

Issue

5

Pages

91-95

Language

en

Sources

openalex crossref

Cite

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