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Asymmetrically Dominated Choice Problems and Random Incentive Mechanisms

James Cox (), Vjollca Sadiraj () and Ulrich Schmidt

No 2012-10, Experimental Economics Center Working Paper Series from Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University

Abstract: A common methodology in experimental research is the use of random incentive mechanisms. This note investigates possible distortion induced by such mechanisms in the context of choice under risk. In the baseline (one task) treatment of our experiment 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 behavior can be systematically manipulated. This implies that the isolation hypothesis is violated and the random incentive mechanism does not elicit true preferences in our example.

Keywords: random incentive mechanism; isolation; asymmetrically dominated alternatives (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Pages: 5
Date: 2012-06, Revised 2014-03
New Economics Papers: this item is included in nep-dcm and nep-exp
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http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2012-10.pdf First version, 2012 (application/pdf)
http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2014-02.pdf Revised version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:exc:wpaper:2012-10

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