Completing incomplete preferences

Qiu, Jianying (2015): Completing incomplete preferences.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: incomplete preferences, incentive-compatible measurement mechanism, experiments, the incompleteness in preferences
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B40 - General; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty

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