Debiasing the Becker – DeGroot – Marschak valuation mechanism

David de Meza and Diane Reyniers ()
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Diane Reyniers: London School of Economics

Economics Bulletin, 2013, vol. 33, issue 2, 1446-1456

Abstract: This experiment finds that the Becker-DeGroot-Marschak (BDM) (1964) valuation mechanism under-predicts the proportion of subjects choosing cash over an item. The extent of the divergence is increasing in risk aversion, which is consistent with reference dependent preferences. This suggests a reframing of the BDM to improve its performance. The modified BDM mechanism is found to better match choices at a single offer price (SOP).

Keywords: BDM mechanism; bias. (search for similar items in EconPapers)
JEL-codes: C9 D8 (search for similar items in EconPapers)
Date: 2013-06-14
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Citations: View citations in EconPapers (4)

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