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Completing incomplete preferences

Qiu, Jianying (2015): Completing incomplete preferences.

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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.

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