Separating real incentives and accountability

Accountability—the expectation on the side of the decision maker that she may have to justify her decisions in front of somebody else—has been found by psychologists to strongly influence decision-making processes. The awareness of this issue remains however limited amongst economists, who tend to focus on the motivational effects of financial incentives. Accountability and incentives may provide different motivations for decision makers, and disentangling their effects is thus important for understanding real-world situations in which both are present. Separating accountability and incentives, I find different effects. Accountability is found to reduce preference reversals between frames, for which incentives have no effect. Incentives on the other hand are found to reduce risk seeking for losses, where accountability has no effect. In a choice task between simple and compound events, accountability increases the preference for the normatively superior simple event, while incentives have a weaker effect going in the opposite direction.