Abstract-Psychologists and economists agree that a wide range of incentives can affect human decision behavior in the laboratory. However, they often disagree on the methodological and operational aspects involved in modeling and studying these incentives (Zwick, Erev, & Budescu, 1999). Economists almost always use financial incentives. In contrast, most psychologists who study judgment and decision making (JDM) use only hypothetical payments. A recent investigation of a 10-year sample of empirical studies published in the Journal of Behavioral Decision Making showed that only 48 of the 186 studies (26%) employed financial incentives. As Hertwig and Ortmann (2001) pointed out, this percentage very likely overestimates the use of financial incentives (strictly defined as performance-based monetary payments) in psychological research.The discussion of the methodological differences in the way psychologists and economists design and conduct their experiments often focuses on the presence or absence of financial incentives (e.g., Camerer, 1997;Hertwig & Ortmann, 2001;Zwick et al., 1999). Important as this issue is, there is evidence that in assessing the validity of JDM experimental research and the potential applications of its findings, it is the magnitude of financial incentives, rather than their presence, that mostly matters (Camerer & Hogarth, 1999;Gneezy & Rustichini, 2000). Even when they are contingent on performance, low payments may not be sufficient to overcome the effects of habits, traditions, social norms, moral values, and various emotions that, although recognized as important, are presently excluded from most of the theories of individual and interactive decision making. Budget considerations typically impose a severe constraint on subjects' payments. In the United States, most JDM experiments that pay their participants limit individual payment to between $10 and $25 per 2-hr session. It is quite possible that for many experiments these financial incentives are sufficiently strong to overcome (at least in part) intrinsic, social, and other nonmonetary motivations. Nevertheless, for generalizing the laboratory results to real-life situations, it is important to break away from the customary budget constraints. The major purpose of the present study was to test the hypothesis that the magnitude of financial incentives in a class of interactive situations involving mutual trust matters.The most important solution concept for interactive decision making in noncooperative games is the Nash equilibrium-an n -tuple of strategies with the property that none of the n players can benefit by unilateral deviation. Put differently, under equilibrium play, each strategy is a best response to the strategies of the remaining n -1 players. Nash (1950, 1951) proved that every noncooperative n -person game with a finite strategy space has at least one equilibrium in either pure or mixed strategies.1 Experimental studies designed to assess the descriptive power of the Nash equilibrium have been conducted in the past...