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Completing incomplete preferences

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  • Qiu, Jianying

Abstract

We propose a model for individuals who have incomplete preferences and attempt to complete them. We show that two empirical puzzles ‑ the willingness-to-pay and willingness-to-ask (WTP-WTA) gap as well as the present bias ‑ arise naturally in the process of completing incomplete preferences. Based on the model, an incentive-compatible mechanism to measure the incompleteness in preferences is developed. An experimental implementation of the measurement mechanism provides results consistent with our model.

Suggested Citation

  • Qiu, Jianying, 2015. "Completing incomplete preferences," MPRA Paper 72933, University Library of Munich, Germany, revised 18 Jul 2016.
    • Handle: RePEc:pra:mprapa:72933
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    References listed on IDEAS

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    More about this item

    Keywords

    incomplete preferences; incentive-compatible measurement mechanism; experiments; the incompleteness in preferences;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • 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

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