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Separated Decisions

Paul Healy () and Alexander Brown ()

No 16-02, Working Papers from Ohio State University, Department of Economics

Abstract: An essential requirement in the analysis of choice data is that its elicitation be incentive compatible: the incentives provided should not skew agents’ choices. We test incentive compatibility of the random problem selection (RPS) payment mechanism, wherein one choice is randomly chosen for payment. We find that it is not incentive compatible when all decisions are shown in a standard list format. But when the rows of the list are randomized and shown on separate screens, incentive compatibility is restored. This causes more inconsistency between choices, but, since the experiment is incentive compatible, this inconsistency must be inherent in subjects’ preferences.

Keywords: Payment mechanism; experimental methodology; monotonicity; decisions under uncertainty (search for similar items in EconPapers)
JEL-codes: C90 D01 D03 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-upt
Date: 2016-01
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