EconPapers    
Economics at your fingertips  
 

Asymmetrically Dominated Choice Problems, the Isolation Hypothesis and Random Incentive Mechanisms

James Cox, Vjollca Sadiraj and Ulrich Schmidt

PLOS ONE, 2014, vol. 9, issue 3, 1-3

Abstract: This paper presents an experimental study of the random incentive mechanisms which are a standard procedure in economic and psychological experiments. Random incentive mechanisms have several advantages but are incentive-compatible only if responses to the single tasks are independent. This is true if either the independence axiom of expected utility theory or the isolation hypothesis of prospect theory holds. We present a simple test of this in the context of choice under risk. In the baseline (one task) treatment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism risk behavior can be manipulated systematically. This implies that the isolation hypothesis is violated and the random incentive mechanism does not elicit true preferences in our example.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0090742 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 90742&type=printable (application/pdf)

Related works:
Working Paper: Asymmetrically Dominated Choice Problems, the Isolation Hypothesis and Random Incentive Mechanisms (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0090742

DOI: 10.1371/journal.pone.0090742

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone (plosone@plos.org).

 
Page updated 2024-12-28
Handle: RePEc:plo:pone00:0090742