Do monetary incentives and chained questions affect the validity of risk estimates elicited via the Exchangeability Method? An experimental investigation
Using a laboratory experiment, we investigate the validity of stated risks elicited via the Exchangeability Method (EM) using an evaluation method based on de Finetti’s notion of coherence, under which probability estimates are valid if and only if they obey all axioms of probability theory. The validity of risk estimates elicited through the EM has been theoretically questioned because the chained structure of the game is thought to potentially undermine the incentive compatibility of the elicitation mechanism even when real monetary incentives are provided. We investigate this by designing and implementing four experimental treatments. Respondents are divided in two initial treatment groups: in the first, they are provided with real monetary incentives, and in the second, subjects are not. Each group is further sub-divided in two treatment groups, in the first, the chained structure of the experimental design made quite clear to the subjects, while, in the second, the chained structure is hidden by resorting the elicitation questions. The superiority of real monetary incentives is not evident when people are presented with chained experimental design.
|Date of creation:||Jun 2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.iaae-agecon.org/|
More information through EDIRC
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.:
- Mohammed Abdellaoui & Laetitia Placido & Aurélien Baillon & P.P. Wakker, 2011.
"The Rich Domain of Uncertainty: Source Functions and Their Experimental Implementation,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Mohammed Abdellaoui & Aurelien Baillon & Laetitia Placido & Peter P. Wakker, 2011. "The Rich Domain of Uncertainty: Source Functions and Their Experimental Implementation," American Economic Review, American Economic Association, vol. 101(2), pages 695-723, April.
- Glenn W Harrison & John A List & Charles Towe, 2007.
"Naturally Occurring Preferences and Exogenous Laboratory Experiments: A Case Study of Risk Aversion,"
Econometric Society, vol. 75(2), pages 433-458, 03.
- Charles Towe & Glenn Harrison & John List, 2004. "Naturally occurring preferences and exogenous laboratory experiments: A case study of risk aversion," Framed Field Experiments 00155, The Field Experiments Website.
- Andersen, Steffen & Fountain, John & Harrison, Glenn W. & Rutström, Elisabet E., 2009.
"Estimating Subjective Probabilities,"
05-2009, Copenhagen Business School, Department of Economics.
- Steffen Andersen & John Fountain & Glenn W. Harrison & E. Elisabet RutstrÃ¶m, 2010. "Estimating Subjective Probabilities," Experimental Economics Center Working Paper Series 2010-08, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Machina, Mark J & Schmeidler, David, 1992.
"A More Robust Definition of Subjective Probability,"
Econometric Society, vol. 60(4), pages 745-80, July.
- Mark J. Machina & David Schmeidler, 1990. "A More Robust Definition of Subjective Probability," Discussion Paper Serie A 306, University of Bonn, Germany.
- Machina,Mark & Schmeidler,David, 1991. "A more robust definition of subjective probability," Discussion Paper Serie A 365, University of Bonn, Germany.
- Carl S. Spetzler & Carl-Axel S. Staël Von Holstein, 1975. "Exceptional Paper--Probability Encoding in Decision Analysis," Management Science, INFORMS, vol. 22(3), pages 340-358, November.
- Theo Offerman & Joep Sonnemans & Gijs Van De Kuilen & Peter P. Wakker, 2009. "A Truth Serum for Non-Bayesians: Correcting Proper Scoring Rules for Risk Attitudes ," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1461-1489.
- Glenn Harrison & John List, 2004.
Artefactual Field Experiments
00058, The Field Experiments Website.
- Justin Baker & W. Douglass Shaw & Mary Riddel & Richard T. Woodward, 2009. "Changes in subjective risks of hurricanes as time passes: analysis of a sample of Katrina evacuees," Journal of Risk Research, Taylor & Francis Journals, vol. 12(1), pages 59-74, January.
- Riddel, Mary C. & Shaw, W. Douglass, 2006. "A Theoretically-Consistent Empirical Non-Expected Utility Model of Ambiguity: Nuclear Waste Mortality Risk and Yucca Mountain," Pre-Prints 23964, Texas A&M University, Department of Agricultural Economics.
- Harrison, Glenn W., 1986. "An experimental test for risk aversion," Economics Letters, Elsevier, vol. 21(1), pages 7-11.
- repec:hal:journl:hal-00609214 is not listed on IDEAS
- Fiore, Stephen M. & Harrison, Glenn W. & Hughes, Charles E. & Rutstrm, E. Elisabet, 2009. "Virtual experiments and environmental policy," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 65-86, January.
- Andersen, Steffen & Fountain, John & Harrison, Glenn W. & Rutström, Elisabet E., 2009. "Estmating Aversion to Uncertainty," Working Papers 07-2009, Copenhagen Business School, Department of Economics.
- W. Douglass Shaw & Paul M. Jakus & Mary Riddel, 2012. "Perceived Arsenic-Related Mortality Risks For Smokers And Non-Smokers," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 417-429, 07.
- Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-69, December.
- Chew Soo Hong & Jacob S. Sagi, 2006. "Event Exchangeability: Probabilistic Sophistication Without Continuity or Monotonicity," Econometrica, Econometric Society, vol. 74(3), pages 771-786, 05.
- Jakus, Paul M. & Shaw, W. Douglass & Nguyen, To N. & Walker, Mark, 2009. "Risk Perceptions of Arsenic in Tap Water and Consumption of Bottled Water," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49221, Agricultural and Applied Economics Association.
- Cerroni, Simone & Shaw, W. Douglass, 2012. "Does climate change information affect stated risks of pine beetle impacts on forests? An application of the exchangeability method," Forest Policy and Economics, Elsevier, vol. 22(C), pages 72-84.
- repec:feb:artefa:0090 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:ags:iaae12:125468. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.