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Separated Decisions

Author

Listed:
  • Paul J. Healy

    (Department of Economics, Ohio State University)

  • Alexander L. Brown

    (Department of Economics, Texas A&M University)

Abstract

An essential requirement in the analysis of choice data is that its elicitation be incentive compatible: the incentives provided should not skew agents’ choices. We test incentive compatibility of the random problem selection (RPS) payment mechanism, wherein one choice is randomly chosen for payment. We find that it is not incentive compatible when all decisions are shown in a standard list format. But when the rows of the list are randomized and shown on separate screens, incentive compatibility is restored. This causes more inconsistency between choices, but, since the experiment is incentive compatible, this inconsistency must be inherent in subjects’ preferences.

Suggested Citation

  • Paul J. Healy & Alexander L. Brown, 2016. "Separated Decisions," Working Papers 16-02, Ohio State University, Department of Economics.
    • Handle: RePEc:osu:osuewp:16-02
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    References listed on IDEAS

    as
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    3. Feyisa, Ashenafi Duguma & Maertens, Miet & de Mey, Yann, 2023. "Relating risk preferences and risk perceptions over different agricultural risk domains: Insights from Ethiopia," World Development, Elsevier, vol. 162(C).
    4. Kim, Tami & Martin, Daniel, 2021. "What do consumers learn from regulator ratings? Evidence from restaurant hygiene quality disclosures," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 234-249.
    5. Banerjee, Priyodorshi & Das, Tanmoy, 2019. "Simultaneous decisions under risk: An experimental investigation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    6. Gamba, Astrid & Regner, Tobias, 2019. "Preferences-dependent learning in the centipede game: The persistence of mistrust," European Economic Review, Elsevier, vol. 120(C).
    7. Xie, Lusi & Adamowicz, Wiktor & Kecinski, Maik & Fooks, Jacob R., 2022. "Using economic experiments to assess the validity of stated preference contingent behavior responses," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    8. Herranz-Zarzoso, Noemí & Sabater-Grande, Gerardo & Jaramillo-Gutiérrez, Ainhoa, 2020. "Framing and repetition effects on risky choices: A behavioural approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Payment mechanism; experimental methodology; monotonicity; decisions under uncertainty;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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