Laboratory studies of choice and decision making among real monetary rewards typically use smaller real rewards than those common in real life. When laboratory rewards are large, they are almost always hypothetical. In applying laboratory results meaningfully to real-life situations, it is important to know the extent to which choices among hypothetical rewards correspond to choices among real rewards and whether variation of the magnitude of hypothetical rewards affects behavior in meaningful ways. The present study compared real and hypothetical monetary rewards in two experiments. In Experiment 1, participants played a temporal discounting game that incorporates the logic of a repeated prisoner's-dilemma (PD) game versus tit-for-tat; choice of one alternative ("defection" in PD terminology) resulted in a small-immediate reward; choice of the other alternative ("cooperation" in PD terminology) resulted in a larger reward delayed until the following trial. The larger-delayed reward was greater for half of the groups than for the other half. Rewards also differed in type across groups: multiples of real nickels, hypothetical nickels, or hypothetical hundred-dollar bills. All groups significantly increased choice of the larger delayed reward over the 40 trials of the experiment. Over the last 10 trials, cooperation was significantly higher when the difference between larger and smaller hypothetical rewards was greater. Reward type (real or hypothetical) made no significant difference in cooperation on most measures. In Experiment 2, real and hypothetical rewards were compared in social discounting--the decrease in value to the giver of a reward as social distance increases to the receiver of the reward. Social discount rates were well described by a hyperbolic function. Discounting rates for real and hypothetical rewards did not significantly differ. These results add to the evidence that results of experiments with hypothetical rewards validly apply in everyday life.
Judgment and Decision Making
Locey, M., Jones, B., & Rachlin, H. (2011). Real and Hypothetical Rewards in Self-Control and Social Discounting. Judgment and Decision Making. https://oaks.kent.edu/node/4169
Locey, Matthew, Bryan Jones, and Howard Rachlin. 2011. “Real and Hypothetical Rewards in Self-Control and Social Discounting”. Judgment and Decision Making. https://oaks.kent.edu/node/4169.
Locey, M., B. Jones, and H. Rachlin. Real and Hypothetical Rewards in Self-Control and Social Discounting. Judgment and Decision Making, 1 Aug. 2011, https://oaks.kent.edu/node/4169.