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Incentives in Experiments with Objective Lotteries

Paul Healy (), Yaron Azrieli and Christopher Chambers

No 16-04, Working Papers from Ohio State University, Department of Economics

Abstract: When subjects in an experiment are given multiple decisions, their choices in one decision may be distorted by the choices made in others. An experiment’s payment mechanism is incentive compatible if no such distortions occur. Azrieli et al. (2014) provide two characterizations of incentive compatible mechanisms in a general decision-theoretic framework in subjects’ choices are represented as Savage-style acts. In particular, paying for one randomly-chosen problem — the Random Problem Selection (RPS) mechanism — is incentive compatible when we assume preferences satisfy event-wise monotonicity, and nothing else. Here, we consider the case where subjects view gambles as objective lotteries. Using completely different proof techniques, we show that the set of incentive compatible mechanisms under the monotonicity assumption is strictly larger than in the acts case. We discuss these new incentive compatible mechanisms in detail.

Keywords: Experimental design; decision theory; mechanism design (search for similar items in EconPapers)
JEL-codes: D81 D84 (search for similar items in EconPapers)
Pages: 24 Pages
Date: 2016-05
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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