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On Price Data Elicitation: a Laboratory Investigation

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  • Morone, Andrea

Abstract

There is abundant literature in experimental research on decision making under risk, which compares, and ranks subjects’ preferences on the basis of some elicitation method. The present paper performs a similar analysis in order to compare them. Since pricing data lead in many cases to some anomalies (i.e. status quo bias endowment effect) we examine three mechanisms to elicit price preferences: willingness-to-pay in a second price auction, willingness-to-accept in a second price auction, and certainty equivalent elicited with BDM. A Bayesian interpretation of our results suggests that it is not possible to state ex-ante the more appropriate elicitation method for a particular subject: for 1/3 of our sample WTP is preferred for 1/3 of our sample WTA is preferred and for the remaining 1/3 BDM is preferred.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18358.

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Date of creation: Oct 2009
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Handle: RePEc:pra:mprapa:18358

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Keywords: willingness-to-pay; willingness-to-accept; BDM; second price auction;

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References

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  9. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
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Cited by:
  1. Stefan Zeisberger & Dennis Vrecko & Thomas Langer, 2012. "Measuring the time stability of Prospect Theory preferences," Theory and Decision, Springer, vol. 72(3), pages 359-386, March.
  2. Ozlem Ozdemir & Andrea Morone, 2012. "Black Swan Protection: an Experimental Investigation," Working Papers 2012/12, Economics Department, Universitat Jaume I, Castellón (Spain).

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