The effect of payment medium on effort

Abstract

There are a number of payment mediums that are used to pay participants in Economics lab experiments, with cash payments being common practice. However, institutional barriers or funding constraints may prevent researchers using this conventional payment medium.Alternative payment mediums may have different psychological effects on participants, and thereby change the behaviour in the lab. In this paper, we investigate the effect of using different payment mediums on participants. We find that different payment mediums affect participants' effort when a fixed payment scheme is used, but does not influence effort when a performance-based scheme is used.