An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data
AbstractExperimental research on decision making under risk has until now always employed choice data in order to evaluate the empirical performance of expected utility and the alternative non-expected utility theories. The present paper performs a similar analysis which relies on pricing data instead of choice data. Since pricing data lead in many cases to a different ordering of lotteries than choices (e.g. the preference reversal phenomenon) our analysis may have fundamental different results than preceding investigations. We elicit three different types of pricing data: willingness-to-pay, willingness-to-accept and certainty equivalents under the Becker-DeGroot-Marschak (BDM) incentive mechanism. One of our main result shows that the comparative performance of the single theories differs significantly under these three types of pricing data.
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Bibliographic InfoPaper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2005-28.
Length: 16 pages
Date of creation: Nov 2005
Date of revision:
Other versions of this item:
- Andrea Morone & Ulrich Schmidt, 2008. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Bulletin, AccessEcon, vol. 4(20), pages 1-12.
- Morone, Andrea & Schmidt, Ulrich, 2006. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Working Papers 2006,08, Christian-Albrechts-University of Kiel, Department of Economics.
- Morone, Andrea & Schmidt, Ulrich, 2003. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃ¤t der Leibniz UniversitÃ¤t Hannover dp-280, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-19 (All new papers)
- NEP-DCM-2005-11-19 (Discrete Choice Models)
- NEP-EXP-2005-11-19 (Experimental Economics)
- NEP-UPT-2005-11-19 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Noise and Bias in Eliciting Preferences,"
07/04, Department of Economics, University of York.
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AccessEcon, vol. 3(40), pages 1-7.
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- Andrea Morone, 2007. "Comparison of Mean-Variance Theory and Expected-Utility Theory through a Laboratory Experiment," series 0019, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Oct 2007.
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"On Price Data Elicitation: a Laboratory Investigation,"
18358, University Library of Munich, Germany.
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"Black Swan Protection: an Experimental Investigation,"
2012/12, Economics Department, Universitat Jaume I, Castellón (Spain).
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- Attema, Arthur E. & Brouwer, Werner B.F., 2012. "A test of independence of discounting from quality of life," Journal of Health Economics, Elsevier, vol. 31(1), pages 22-34.
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- Meroz, Yael & Morone, Andrea & Morone, Piergiuseppe, 2009. "Eliciting environmental preferences of Ghanaians in the laboratory: An incentive-compatible experiment," MPRA Paper 17107, University Library of Munich, Germany.
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