Comprehension in risk elicitation experiments

Jens Rommel, Daniel Hermann, Malte Müller and Oliver Musshoff

Applied Economics Letters, 2017, vol. 24, issue 9, 627-634

Abstract: Economic experiments are increasingly conducted with field populations for whom comprehension of instructions may be more difficult to achieve. We investigate how framing experimental instructions in a familiar context and incentivizing the experimental task may affect comprehension. Based on an experiment with 146 German farmers, we compare four different versions of a Holt-and-Laury multiple price list. We find that incentives have a small positive effect on comprehension, as measured by the probability of making inconsistent choices and subjects’ self-assessment. In the absence of incentives, framing negatively affects comprehension. Comprehension is enhanced for farmers who score high on a numeracy test. We conclude that contextual framing might confuse subjects, whereas incentives can help to facilitate comprehension of experimental instructions.

Date: 2017
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DOI: 10.1080/13504851.2016.1217302

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