It’s Up to You! - Pay for Performance Incentive Mechanisms in Conjoint Studies

Incentive-aligned conjoint analysis is one of the core topics in recent preference measurement literature. Even though empirical evidence shows that incentives enhance predictive validity, incentive alignment cannot be applied to every research context, for example, new products that are not yet available. However, as conjoint analysis is often used in that context, we develop a performance-dependent incentive mechanism that is applicable regardless of the availability of real versions of the research object. The mechanism is tested for improvement in predictive validity, compared to a non-performance-based setting. The conjoint experiment is viewed as a hidden action problem that our proposed mechanism can solve. In line with theory, the results show that respondents’ reimbursement should be at least partly performance-dependent.