On Price Data Elicitation: a Laboratory Investigation

Morone, Andrea (2009): On Price Data Elicitation: a Laboratory Investigation.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: willingness-to-pay; willingness-to-accept; BDM; second price auction
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty

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