This chapter focuses in more detail on the role of incentives in experimental sociology. Providing the right incentives in an experiment is an important precondition for drawing valid inferences. This is a predominant view in experimental economics based on the induced-value theory assuming that monetary incentives override any other human motivation in laboratory economic experiments. A slightly less demanding assumption is that subjects can be incentivized by monetary payoffs but are also motivated by other-regarding preferences or reciprocity. On the other hand, psychologists focus on motivations that subjects bring into the laboratory as a predisposition to behavior and on the framing of the situation. Sociological research takes elements from both perspectives and emphasizes institutional, cultural, and social determinants of human behavior. An important theoretical framework for experimental work is sociological work on framing. According to sociological framing theories, subjects interpret the situation in terms of the given cues and select an action that is appropriate to the situation. The chapter discusses the implications of these three views on the design of experiments in sociology.

Monetary incentives or financial rewards are an external financial stimulus that influences the ‘relative price’ of a behaviour relative to the status quo. They reduce (e.g., subsidy, cash transfer) or increase (e.g., co-payment, coinsurance, tax or a penalty) the costs of action or inaction. These incentives can be implemented ex-post or at the point of use (e.g., a user fee), or ex-ante or, before its use (e.g., insurance coverage). Although, the logic that explains the effectiveness of such incentives in the context of health and health care has been long established, its behavioural mechanisms are still subject to discussion and are far from clear-cut. This chapter attempts to shed some light on the matter, and broadly analyse when ‘monetary incentives work’ and what can make them ‘backfire’. In designing incentives, we will expand on the concept of motivation compatibility.

This chapter focuses on describing the conditions under which monetary incentives (M) do not work, and more specifically claims that when considering monetary incentives, other non-monetary or social incentives (S) that help overcome people's cognitive hurdles to engage in desirable health and healthcare behaviour should be combined with them. According to contract design theory, when quality is not observable, we face significant challenges in designing healthcare contracts. This is important in incentive design. The problems we typically face in these circumstances are that the outcomes for which we design the incentives are not always easy to observe. Contracts based on trust appear to be more appropriate in these circumstances.