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Experimental Elicitation of Ambiguity Attitude using the Random Incentive System

Aurelien Baillon (baillon@ese.eur.nl), Yoram Halevy and Chen Li

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: We demonstrate how the standard usage of the random incentive system in ambiguity experiments is not incentive compatible if the decision maker is ambiguity averse. We propose a slight modification of the procedure in which the randomization takes place before decisions are made and the state is realized and prove that if subjects evaluate the experimental environment in that way (first - risk, second - uncertainty), incentive compatibility may be restored.

Keywords: Uncertianty; Design of Experiments (search for similar items in EconPapers)
JEL-codes: C9 D81 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2014-06-15, Revised 2015-07-21
New Economics Papers: this item is included in nep-exp and nep-upt
References: Add references at CitEc
Citations: View citations in EconPapers (23)

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Related works:
Journal Article: Experimental elicitation of ambiguity attitude using the random incentive system (2022) Downloads
Working Paper: Experimental elicitation of ambiguity attitude using the random incentive system (2022)
Working Paper: Experimental elicitation of ambiguity attitude using the random incentive system (2021) Downloads
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