I am instructing a section of a senior level capstone design course at an engineering university, split into two groups each working on a different project. One group of six is working with some specialized computer hardware, the relatively cheap RTL-SDR USB devices. They have expressed an interest in continuing to learn with these devices after the project is over, but I of course can't give them University-owned equipment. So, I had the bright idea to spend $10 per student out of my own pocket and give them these RTL-SDR devices as a prize for a project successfully completed. My intention is to further their academic interests in this field, and it costs me relatively little to do so, similar to treating them to dinner.
So, two ethical queries:
Is giving a $10 prize/gift to each of six students itself ethically questionable? It bears mentioning that I am research faculty, not a tenure track professor, and my teaching evaluations have no bearing on my career at this stage.
Is it unethical to give a gift/prize to one team and not the other? I have four more students working on the second project, and would gladly invest $10 per student in that group as well. However, their project doesn't lend itself to some low cost, project related hardware that they can continue to learn with after the project is over.
Many institutions have a dollar limit on what is considered a small gift that does not present a conflict of interest or other unethical circumstance. $10/person is probably well below that limit but you could probably check with admin.
However, that does not prevent the students of the second group perceiving unequal incentives for the different projects. It could be de-motivating for them to see the other group being materially encouraged. It would be ideal to somehow equalize the incentivizing of both projects.