Pay Every Subject or Pay Only Some?

One technique employed by budget-conscious researchers is to pay only some of the subjects for their choices in an experiment. We test the effect of paying some subjects versus paying all subjects in the context of risk preferences, controlling for the difference in stakes induced by paying only some subjects. Over two experiments, we demonstrate that paying only some subjects yields lower levels of risk aversion than does paying all subjects, though it yields more risk aversion than paying all subjects lower stakes with expected values equivalent to the "pay some" condition. We also demonstrate that paying only some subjects not only changes the level of risk aversion but also impacts the ordering of subjects by elicited risk aversion. Neither probability weighting nor standard experimental demographics were correlated with subjects' differences between these conditions. We exploit our multiple measurements of risk aversion to estimate a simple structural model of latent risk aversion, and use these results to derive a correction factor in order to approximate the results as if all subjects were paid high stakes. Our findings imply that probabilistically paying some subjects high stakes meaningfully impacts the elicited level of risk aversion, although it better approximates the experimental ideal of paying all subjects high stakes compared to paying all subjects lower stakes.