  The use of hypothetical instead of real decision-making incentives remains
under debate after decades of economic experiments. Standard incentivized
experiments involve substantial monetary costs due to participants' earnings
and often logistic costs as well. In time preferences experiments, which
involve future payments, real payments are particularly problematic. Since
immediate rewards frequently have lower transaction costs than delayed rewards
in experimental tasks, among other issues, (quasi)hyperbolic functional forms
cannot be accurately estimated. What if hypothetical payments provide accurate
data which, moreover, avoid transaction cost problems? In this paper, we test
whether the use of hypothetical - versus real - payments affects the
elicitation of short-term and long-term discounting in a standard multiple
price list task. One-out-of-ten participants probabilistic payment schemes are
also considered. We analyze data from three studies: a lab experiment in Spain,
a well-powered field experiment in Nigeria, and an online extension focused on
probabilistic payments. Our results indicate that paid and hypothetical time
preferences are mostly the same and, therefore, that hypothetical rewards are a
good alternative to real rewards. However, our data suggest that probabilistic
payments are not.
