On Monday I did an interview for a TV show (to appear in 2010), and they put me up at a famous expensive hotel. I’m sure others get extra value from this hotel, but it didn’t do much for me. I asked the show manager about this and he said that they have ethical problems with paying cash to interviewees, but want to compensate them for their trouble. I sighed, thinking: what exactly could go wrong with cash that couldn’t go wrong with generous travel compensation?
I suppose we could make sense of this by assuming that observers can’t be bothered to notice the amount of cash given or the quality of the travel provided, all they can tell is if you were given cash, travel expenses, or both. But I’m kinda skeptical this is really what’s going on.
TV shows compete for high quality guests and must provide their guests with a good experience, to encourage the guests to come back and also to build up a good reputation among the guests' peer group. This effect also increases your likelihood of getting some good softball questions.
Depending on your peer group, shows that pay in cash might be held in lower regard. TV shows must also compete for ethically sensitive viewers and avoid negative publicity that may come from seeming to endorse the views of their guests.
If the industry standard were to pay cash to guests, conflicts would invetiably arise about whether some guests deserve to be paid more than other guests and why. The convention of not paying guests is a stable equilibrium that saves the TV shows from having to do (additional) ego-damage control.
In this case I happen to know they scheduled my room via Travelocity, which suggests they didn't get a special deal on the price, and they were willing to pick a different hotel if I had suggested one.